On September 28th, 2010, Apple had opened at $291.77 and was followed by a sharp and quick sell off down to $275.00. Moving down $16.77 in a matter of seconds. As this volatile move came about, someone took advantage of the day by selling 4000 240/230 put options: http://twitpic.com/2subbs. This created a spread with a net credit of $1.50 4k times giving the seller a credit of $600,000 and a max risk of $3.4 million dollars with Apple closing under 230 by Jan 21, 2011. (240-230=10, 10x100shares per option = 1000, 1000x4000 = 4mil, 4mil-600k credit=$3.4m).
Apple held those lows and retested them on October 4th with a low of $277.77. Since then, Apple has marched higher with yesterday breaking through the $300 benchmark. Today, Apple has made a new 52wk high of $302.47 and that same spread sold on 9/28 for $1.50 is now trading worth about .88. A 62 cent gain on the 4k spread has made someone $248k richer. Is the person out? We do not know, but we do know that this person took on some big risk, and gave us the indication that they thought Apple would hold above that level. The longer it holds above $240, the more of that $600k they can keep. In any event, a very nice trade indeed!
RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS.
Thank you and best of luck trading!
Stewart Solaka
Twitter: @CHICAGOSTOCK
EMAIL: CHICAGOSTOCK
1 comment:
Good find, awesome trade! Did you see AAPL ramp 4$ at the close Friday? And op ex too, jeese. You could have bought the AAPL Oct. 310 calls at the open for like 20c and sold them at the close for 5$. Fortunes are being made and lost on AAPL options.
In my humble opinion, AAPL is a game of musical chairs and when the music stops its gonna get creamed. Probably next week on earnings. I mean, how much to they have to beat by to justify this move?
Post a Comment