026. PIGGISH PLAY - Short Apple Inc. (AAPL)
Updated
I think this Microsoft earnings report is going to be pretty important because of how it's past reports have affected the FAANG gang in 2020. Specifically, the report announced in Q3 2020 started a pretty nasty sequence of tech selloffs that week. It's tough going first, but it is much tougher going second if the lead off is shaky. This is the reason why Nividia can occasionally receive the cold shoulder as the last in the lineup.
If I were Apple's C-X-O right now, I would be praying for the most outstanding quarter in firm history. Anything short of that will likely lead to mass selling, if Microsoft is to start the popping-of-the-bubble tomorrow night. And let's be realistic here - the current tech stock environment is far from anything resembling fair value. If it were not an apparent safe haven, Apple would likely be trading closer to 100/share right now, given its imperfect report two quarters ago.
Therefore, I'd like to take advantage of this domino-effect by buying AAPL puts - and lots of them.
And guess what?
It's possible because they imply very low volatility compared to what is very likely going to occur over the next few swings. This is the key to this trade idea - MSFT's contracts are a much fairer deal in terms of premium to likely-reality-IV. Apple's are not.
PIG SPECS:
AAPL PUTS:
-STRIKE: 137/share
-EXPIRATION: February 5th, 2021
Recommend selling pretty soon after price enters the profit zone stated in the chart. The real value is mostly captured on the greater-than-average move down itself, rather than the specific number of points beyond the money.
- ApPig Inc.
AAPL
MSFT
NDX
SPX
FNGS
If I were Apple's C-X-O right now, I would be praying for the most outstanding quarter in firm history. Anything short of that will likely lead to mass selling, if Microsoft is to start the popping-of-the-bubble tomorrow night. And let's be realistic here - the current tech stock environment is far from anything resembling fair value. If it were not an apparent safe haven, Apple would likely be trading closer to 100/share right now, given its imperfect report two quarters ago.
Therefore, I'd like to take advantage of this domino-effect by buying AAPL puts - and lots of them.
And guess what?
It's possible because they imply very low volatility compared to what is very likely going to occur over the next few swings. This is the key to this trade idea - MSFT's contracts are a much fairer deal in terms of premium to likely-reality-IV. Apple's are not.
PIG SPECS:
AAPL PUTS:
-STRIKE: 137/share
-EXPIRATION: February 5th, 2021
Recommend selling pretty soon after price enters the profit zone stated in the chart. The real value is mostly captured on the greater-than-average move down itself, rather than the specific number of points beyond the money.
- ApPig Inc.
AAPLMSFTNDXSPXFNGSTrade active
Two Thoughts:1) Thats quite a beat from Billy Gates. He nearly offset an entire market selloff.
2) He didn't quite, though, and that is important. The only thing hedge fund managers will be saying now that it didnt hold is that we are clearly in a tech bubble.
Trade active
Alright, alright. Closing these out today if it hits 27.45 (ideal PT).Reason is that any sort of annoying bounce thereafter is going to make this trade a much bigger headache than what is required. So, Im taking em all today regardless and going to scale out slowly starting now until 27.45.
If its a really red close, i may roll out some lotto puts for fun. Profit first, fun later.
Trade closed: target reached
Was closed the day of the comment above. If still short, wonderful stuff.You will likely get paid dos bags instead of uno bag by Thursday.
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