Best Stock on the Market

Call Spread on AAPL on 2/21/2013

Apple Inc. (Apple) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company's products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service and support offerings. The Company also sells and delivers digital content and applications through the iTunes Store, App StoreSM, iBookstoreSM, and Mac App Store. The Company sells its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. In February 2012, the Company acquired app-search engine Chomp.

Stockwinners is bullish on this name for the following reasons:

  1.  AAPL has a shareholder meeting on Feb 27th, which could serve as a near-term catalyst, as a potential buy-the-rumor rally into the event.  Combine that with the strong technical backdrop, and the risk/reward for playing a bounce seems attractive to me.
  2. This is a short-term trade, which is why we haven’t focused on the fundamentals of AAPL.  The long-term story is not going to drive the stock over the next 3 weeks.  This trade is more speculative than most that we’ve put on this year.  As such, we will probably cut ourlosses if AAPL does make a new low below 435 in the next few days.  We don’t want to hang around too long if we're quickly proven incorrect.  But as long as it holds 435, we will likely stay in the trade.

Trade

  • Buy 1 March $455.00 Call at $9.00
  • Sell 1 March $475.00 Call at $3.85
  • For a net debit of $5.15

Profit/Loss Analysis

  • Breakeven at $460.15
  • Maximum profit is $1,485.00 at strike of $475.00
  • Maximum loss is ($515.00) at strike of $455.00

Closing Summary

  • Sold 1 March $455.00 Call at $0.00
  • Bought 1 March $475.00 Call at $0.00

Position closed on 3/15/2013 at price of $0.00 with a -100.00% loss in 21 days.

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