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AAPL Makes $76,103 While You Read This
Wednesday Worries – AAPL Makes $76,103 While You Read This
Courtesy of Phil's Stock World
$76,103 – That's not sales, that's profit!
Every minute of every day, AAPL is making $76,103 (at $40Bn a year) on the sale of $316,120 worth of products. No company on Earth comes close to that kind of metric and, overall, the stock's performance clearly indicates that but, if you listen to the mainstream media, you would think AAPL is finished.
We had an in-depth discussion about AAPL in Member Chat this morning and we not only concluded it's still a buy. We came up with a spread that has the potential to turn $3,000 into $45,000 between now and Jan 2015 IF AAPL holds $600. Needless to say, it's always nice to have a trade that can return 1,500%, and we rarely get a chance to do them with a blue-chip stock like AAPL.
*****
Here's the trade idea:
In a perfect world, AAPL will test $600 and really dump out all the weak hands ahead of earnings but it's kind of iffy. I love that we can sell the 2015 $400 puts for $40 for a net $360 entry and pair that with the purchase of the $500/600 bull call spread at $50 so we're in AAPL for net $10 on the $100 spread that's 100% in the money and, if we have 3 of those for $3,000 in cash (and about $12,000 in ordinary margin), we can sell 1 Weekly $655 call for $1.50, which is $20 out of the money and if we make 100 sales like that over the next two years, we could collect $15,000 in premium against the $3,000 cash position, and collect $30,000 if AAPL is over $600.
This plan is dependent on AAPL holding $600 and I'd avoid selling calls on earnings weeks, when you are most likely to get burned.
*****
Note in the above chart, that AAPL is still a relative outperformer this year – as shown priced against HPQ, DELL, INTC, IBM, CAT and ISRG – all good companies that have simply failed to keep up.
We also like HPQ at this level, now $14.30, as its REDUCED guidance has it earning $3.62 per share next year after earning $4.05 this year and that's still 25% back on your money, which sure beats TBills. That's not even counting the $18Bn in cash HPQ has on hand, which is quite a lot when you consider that its entire market cap is now just $28Bn. Small wonder HPQ spent $9Bn buying back its own stock last year, when it was priced 100% higher.
HPQ is a pretty good candidate for a buy/write, where we Buy the stock for $14.30 and Write (SELL) a 2014 $15 put and call (sell short) for $5.50 (combined) and that nets $8.80 on the trade. If HPQ is below $15 in Jan 2014, then another round of shares will be put to us at $15 for an average entry on 2x of $11.90, which is 17% below the current price and, if HPQ is over $15 in 16 months, then we get called away at $15 for a $6.20 profit on cash (75%). Buy/writes are our favorite tools for making long-term entries – see "How to Buy a Stock for a 15-20% Discount." (To try out Phil's Stock World with a discount, click here.)
Let's look at a similar trade idea for INTC. INTC is beaten-down at $22 but may go down to $17.50 before stabilizing so this is a bit early, but we can buy the stock for $22 and sell the 2015 $20 call for $3.70 and the $15 put for $1.50 and that drops the net entry to $16.80, which is 23.6% off the current price, and lower than I think it's likely to fall. We're only committing to buying another round at $15, and that's 32% off the current price, which would give us an average entry of $15.90 – worst case. If called away at $20, our gain is $3.20 of our net cash investment of $16.80 or 19% over 28 months. Not a bad return for betting Intel simply doesn't fall more than 10% lower than it is now.
This INTC trade idea is not as exciting as HPQ because it's considered less risky and we're being more cautious as we don't think INTC has bottomed yet. INTC also pays a $0.90 dividend while we wait – adding another 5.3% to our annual return! This is better than T-Bills folks…
Now, back to the markets. As we can see from our Big Chart, we're having a bit of a pullback, with the Nasdaq and Russell down 5% from the September highs and the other indices down roughly 2.5% so far.
The Nasdaq made a critical failure yesterday as it fell below its 2.5% line AND its 50 dma at 3,082 while the Russell is at its 50 dma at 824 and in danger of failing its 2.5% line at 820 as well. The S&P is our most important indicator and it is right on that critical 5% line at 1,440 – our only index not to fail that level. This is our remaining hope so we'll be watching it VERY closely.
Should the S&P fail – then the Dow has no support down to 13,295. It would make a good short but we're still hoping not to go there.
We're still long-term bullish as nobody notified us that the Fed has withdrawn QE3, and it was just yesterday that China threw another $40Bn into the markets. What's bumming everyone out this week is worries about earnings (not so bad so far) and all these TERRIBLE pronouncements from the IMF's meeting in Tokyo on the state of the Global Economy. At PSW, we've been saying the Global Economy sucks for months so it's not surprising. That now seems to be shocking others, who are running for the exits, but not at an alarming pace so far.
In order to climb a wall of worry, we need to first recognize and accept those worries. What we have here is the beginnings of capitulation after a very long period of denial (where bad news was good news into the Fed). This is why we prefer to buy now with a 20% downside cushion – we're a little early to call it a bottom but the FACT of QE3 means it may not make too low of a trough on the way down. We're using this earnings season to do a little bargain hunting.
Tell us when something new happens that we should be worried about but, so far, China's slowdown we've been discussing all year, Europe's mess is 2-years and counting, California Cities in debt crisis also old news, Japan staggering under 220% debt is bad, but just 10% worse than 2 years ago and 7.8% US Unemployment is the best reading since Obama took office and the only thing we have to worry about there is whether Jack Welch's head will explode if we go down to 7.7% next month.
So far, earnings are coming in better than expected – we'll see how the week plays out but this correction may be shallow indeed if it turns out we've underestimated the recovery in the US and overestimated the impact of China and Europe slowing down.
To try out Phil's Stock World with a discount, click here.
This week's Market Shadows newsletter is here.
Disclaimer
Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results. We make no representations that the techniques used in our rankings or selections will result in or guarantee profits in trading. Further, our analyses are based on third-party data, which we cannot guarantee as to adequacy, accuracy, completeness or timeliness. We accept no responsibility for any loss arising for use of these materials.
Hypothetical or simulated performance results have certain limitations unlike an actual performance report. Simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under or over compensated for the impact, if any, of certain market factors such as lack of liquidity. Simulated trading programs in general are also subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
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"$76,103 – That's not sales, that's profit!..... No company on Earth comes close to that kind of metric.."
Brilliant products, exceptionally reliable, pure class in a world of monopolistic garbage (here's lookin at you Microshite)
"if you listen to the mainstream media, you would think AAPL is finished..."
Not just the MSM, the "fiercely independent" village idiots like Raggy Middleton too... these shills and rampers are usually proven wrong over time, just as Raggy has been hung out to dry throughout 2011 and 2012
"..seems to be shocking others, who are running for the exits, but not at an alarming pace so far."
No stampede yet, a finger in the eyes of all the Idiot, sorry Ellioticians, all over the web who've been blowing their trumpet and walking down High Streets for months and months that "The End Is Nigh". These clowns couldn't time the end if their subscription service depended on it
Apple is currently in its First quarter for 2013. This quarter, The holiday season, is Apple's best. I beleive Apple is now making over $1 Billion profit per week!. So your number of $76,103 is understated.
if you're right, and my fingers are crossed you are, ZH resident mathematical genius, bookworm and Apple-hater, the splendidly GOO-biased Reggie 'run ragged' Middleton, is going to be crushed
(to put it mildly)
I've never bought an Apple anything, and I never will (I have used their products though), for one simple reason, they don't make anything I consider essential or even desirable. Given this, why do people bother to pay a premium price for something they definitely don't need, and it would not matter at all if it never existed?
Same reason they buy sugar-filled flavored carbonated water called 'Coke' -- advertising imagery. Some people are simply vain gullible fools, and image is all-important to their sense of worth and values. It's just amusing to watch how stupid it all is. it reminds me ot the .com bubble and tech-wreck that followed--when "bricks and mortar" suddenly seemed so much more important once again, so we got a massive RE flipping bubble instead.
This whole misallocation cycle is so fucking stupid.
You obviously haven't lived (in the real world)
I've spent 20 years both personally and professionally dealing with Microshites bug-ridden software, virus magnatised garbage, blue screens of death ...not just livid at home, but utterly fucked off when we can't boot up our office PC's or they crash mid-afternoon for an hour or two
Apple: no problems, smooth cool sailing all the way
The Microshite lifestyle is stressed garbage, Apple is a deeply satisfying cool breeze
I pity anyone I see with a Megashite laptop or PC, but in truth it's a Darwinian mechanism sorting the wheatos from the chaffing muppets
the tide has turned
too late to save Reggie though
nimis
Short AAPL; BUY GOLD! AAPL is so over-owned it is silly. When the longs begin to capitulate, it will see a $485 print.
http://bcfreedom.wordpress.com/2012/09/24/death-lies-and-mutations-what-...
AAPL will be paying out of their own pockets $76 103 per person since they don't have any insurance for the damage they are doing to people. No one will insure them, this will, in the end, be the end of AAPL
You heard it here first...people will pick it up in a year or so, as it grows until that point
Grill Boss - have you the remotest clue what you're gibbering about?
I'd estimate running Microshite for any business costs them 20-30 times the new sticker price of their garbage software in staff downtime, IT wages etc as their junk software freezes, crashes or does a kamakazi because of bugs or viruses ...so much for McFee and all the other add ons needed to 'secure' a lemon product that isn't fit for purpose
Why didn't Gates & Bulmer roll out their MS shops? Because unlike Apple who have cues for new products, these 2 monopolists would have cues for their shoddy garbage to be fixed
If you think Apple has problems (they don't) you've not a clue how much incompetence and corruption Megashite has swept under the rug for the past 20 years (so uch for Lemon Laws and those f'n lemons at Consumer protection)
No worries, just put on your tin foil hat.
Follow the NASDAQ100 as a bias for AAPL.
http://bullandbearmash.com/chart/nasdaq-100-daily-october-10-2012/
AAPL makes high margin hardware. Say that again 10 times. High margin hardware. More specifically, high margin PCs in a tablet form.
Yeah, I don't think this will last much longer either.
And they sell their high margin hardware in retail stores that they own.
I'll buy your $400 Jan 2015 puts.
I see a gigantic head and shoulders forming on the long-term chart. That is what I would bet on.
Not saying AAPL is going out of business, just coming back to earth... say around $200 when the dust settles. My experience says that profits like that do not last, the employees of AAPL are human, and that there is real potential for serious economic problems/geopolitical conflict over the next two years... any and all of which are great reasons to buy AAPL puts.
See you on the other side.
The Pedestrian
pedestrian --- broadly speaking, I completely agree w/your mkt view about AAPL. However, I should say the purchase of the 400-strike Jan 2015 puts is hardly the best that you or I can do, given our view that AAPL will come back to earth over time.
For those sharing our view, I should recommend the (relatively) low-capital strategy of buying a 180-day ATM put on every 30-pt rally, and claiming profit on every 60-70 pt dip. Bar some stunning new technology from AAPL (or SamPle, as I call them), this trade holds very little practical risk over time.
Yes, of course, this takes some account management. Yes, of course, the typical 180-day ATM put is dollar-expensive (but NOT IV expensive). Yes, a person adopting this strategy must have both discipline AND patience...a rare enough condition. Notwithstanding, this trade will be profitable over a year's time, and virtually no doubt of it.
For those who haven't that combination of trading attributes, I should advocate NOT the purchase of Jan 2015 400 puts, but rather the purchase of Jan 2015 ATM puts. Buy them, forget you own them (and, if such a trader is sufficiently cynical), vote for Zerobama.
It's always refreshing to see legitimate option strategy commentary, as opposed to not-very-bright snark (bitchez!) on ZeroHedge, and thank you for it.
Good trading to you!
So far, earnings are coming in better than expected – we'll see how the week plays out but this correction may be shallow indeed if it turns out we've underestimated the recovery in the US and overestimated the impact of China and Europe slowing down.
wth are you talking about? Earnings season has not even begun and you're running this line out. What a joker.
The only best thing in the entire post is the emotional graph of the "trader" turned into "investor".
As a former investor----Apple is over. Here are some of the Negatives - California - gasoline/Shipping - Prices- Economy- Factory Location -No leadership- Bad directions, - Industry slump- closing apple stores - Iphone 5 maps -Theft of University Professor Patents - Samsung - Arrogance vs Determination (Yes they have good engineers and great design and marketing)
http://maxkeiser.com/2012/10/09/mysterious-algorithm-was-4-trading-activity-last-week/
FoxConn
Phil's Stock World jumps the shark with AAPL - CRAAPL
One by one they all fall for some foolishness ...
Reggie has been the Pied Piper for the fools
the size 19 clown boots, red funny nose and over-sized daisy on the lapel that squirts water in his own face suits him rather well
Reggie's Apple-hater Series on ZH has been the funniest thing for 2 years since Leo topped himself
hey. ilene. didnt anyone tell you the stock market is a forward pricing mechanism. What is today in a fickle fad tech land doesnt meant thats what it will be getting 6 months or a year from now. get back to me with your "metrix" when the fed if ever is out propping up crapple
Every minute of every day, AAPL is making $76,103 (at $40Bn a year) on the sale of $316,120 worth of products. No company on Earth comes close to that kind of metric...
get back to me with your "metrix" when the fed if ever is out propping up crapple...
When the fed is busy creating ~17k in frns per second , or roughly 1m per minute in order to exchange them for legal possesion of improved US real estate, I'd say the aapl has some catching up to do. 12X the speed and nothing to show for their products, ben is far better at deception.
The apple has fed's junk to guage their success in, while ben has bis/imf approved legal right of possession of real US improved assets.
Better luck next time, and it was nice knowing ya, US middle class. Enjoy your apps.
Someone get Reggie Middleton on speaker phone I need to know what he thinks about this....
you know what Raggy is going to say: GOOfball great, Megashite superb, Apple crap ..the exact opposite of the truth
to dial-up Raggy just ask for the inter-galactic code for Planet Uranus, Reg resides in deep outter space since early 2011, then ask to reverse the charges as his 'advise' isn't worth good money (he's been sitting on stagnant GOO stock stewing in his own juices/bias for 2 years while missing the doubling Apple rocketship, to say he's slightly bitter and twisted is an understatement... in outter space you can't hear Raggy scream ..or spit his dummy out!)
Watch out for that margin compression.
I would buy Apple in the 550-600 range, and would expect it to hit 750 in January when they report their monster xmas quarter. Apple will earn close to $60 per share in 2013, so the stock looks very cheap here at 10x multiple for next year, especially considering the dividend, which will likely be increased again sometime next Spring.
that's what the freedom of enterprise can do for the whole economy, some of us bought in at $25.
http://covert.ias3.com/expose/
If I could figure out an honest way to make $76K a minute that doesn't involve lying or cheating or running a Ponzi or lobbying Congress for taxpayer money or playing the lottery or waging war or destroying the world, I would do it. There is absolutely nothing wrong with earning $76K a minute through honest means.
And anyone would have to be insane not to jump at the chance.
So all you haterz out there -- what part of any of that was incorrect? Just tell me, cuz I'm seriously not getting it.
"...If I could figure out an honest way to make $76K a minute that doesn't involve lying or cheating or running a Ponzi or lobbying Congress for taxpayer money "
right...a huge fucking chunk of apple profit comes from selling apple products to schools and gov offices. the gov could buy cheaper from HPQ...better yet not buy anything. apple is just as dirty as all the other corps...but hey, lets all join the graft. thats capitalism right. get yours while you can....
Apple does not send thugs to schools and gov offices forcing them to buy Apple products at list price if they know what's good for them.
Where do people come up with this stuff anyway.
I guess I have my answer though. There is really nothing fundamentally wrong with making $76k/min in an honest way.
You might wanna compare the explosion in student loan debt with crApple sales.
This may come as a shock to anyone of your high intellectual caliber, but there's no way of knowing what's honest when the entire economic system is corrupted by central planning. No one has a clue what Apple would be making without Uncle Scam's handouts and Chinese leadership keeping their citizens eternally poor.
no blu you are a troll.
It's all good, great products, well run company, great profits ....
BUT, the products are toys for grown ups and the purchasers' excitement to throw out 2-year-old $500 products for the latest and greatest is wasteful in the extreme. Not Apple's fault necessarily but still a generally unproductive habit.
And Apple is way to controlling with the data users store on their OS, in a big brother kind of way.
And the lovers of the stock fail to reckon with the law of large numbers (smart phone industry already almost 1b per year), Apple's declining competitive advantage and premium pricing, and the general insolvency of the customer base.
What will bring aapl down.
1. Those monthly Phone/Data bills will be the first to go after the elections. Kids talking, texting , watching and sending videos, and bringing home Cs from private school with a $400 a month telephone bill after Dad gets laid off from his $13.00 hour job that he got after he got laid off from his 200K a year job, and Mom starts hooking on the street but has to start as assistant crack whore because where else can you make $30/hour to start.
2. The Supreme Court Rules you can't sell your old iPhones anymore.
3. Apple is the first company to outsource production to automated plants in a different country all to avoid paying taxes on it's 100b+ stash of cash. They lead the world in paying debt laden college graduates shit wages to sell their shit. . That shit tends to get old when the economy finally gets wasted next year all over the place, not just where it can't be seen or heard. People begin to notice that a logistics manager has a billion dollar pay package and their kids are living at home because they can't afford rent and still pay the $500 a month on their loans and they work for this guy.
4. Congress gets paid off and interest rates increase to 14.9% on guaranteed student loans with the same penalties as a credit card from Chase. In fact it is a credit card from Chase with no defaults allowed and a $300,000 credit limit. "Go ahead, Make our day, Try Graduate school, it may help, basket weaver, have a iPhone".
5. Apple starts to make iDrones. Control your very own hellfire equipped iDrone from your iPhone and shoot up people , places and things for a million dollar prize. People stop liking Apple. No longer the world's most admired brand. Now the world's most feared brand. Why are they scared? They use slave labor to make the shit, slave labor to sell the shit, and now , the shit actually does something, it blows other shit up. Hedge fund turds start buying the product instead of the stock.
6. Yeah yeah, take your margin compression and compress this!.
The reality distortion field/ Gaussian blur is gone. Apple is now run by corporate turds scared of their own shadow.
Hey other than that , "IT"S ALL GOOD"
iDrone you say? It's on bitchez! Controlled by iPhone / iPad -- strap a gigantic dildo on this baby and swoop on in:
http://www.amazon.com/Parrot-AR-Drone-Quadricopter-Controlled-Android/dp...
"the products are toys for grown ups"
So is the entire professional sports industry, everything made by General Motors, and any house built over 1,500 sq ft. And I'll hazard a guess that 50% of the US economy is hinged on throwing away stuff you didn't need in the first place to make room to buy more stuff you also don't need. That's maybe a slam on the US economy but I don't see how that has any bearing on AAPL or making $76k/min.
Sorry. Still not getting it.
dupe
I think the concern about apple is not with the present but with the future. It is similiar in some respects with other subjects discussed here where everthing appears fine on the surface but there is reason for concern about what's under the hood. If the products don't provide real value and if there is not substance to the claimed advantages - if it is only a fad hyped by the investing industry and the half-wit media then some scepticism may prove benefitial. I personally think that apple may have shot themselves in the foot with the lawsuits as it is hard to view them as progressive or hip. However I've never willingly used an apple product always viewed it as overpriced proprietary fluff. I am very satisfied with my Samsung phone for example.
To each his own way right
"Because we care about you, we've increased the size of the suicide nets".
wut?
Foxconn workers were committing suicide by jumping out the windows of their factory buildings because of the working environment (virtually slave labor camps). To counter this, instead of improving working conditions, they put nets up around the buildings to catch people who try to jump, or to deter them from jumping knowing they won't die in the process. Pretty cool huh? Oh, and apple uses foxconn to build all their fancy toys. Someone said something about an honest earning earlier... not sure that slave labor is all that honest.
You will be very busy keep adding to the net, from here to 2015. Unless you do not care for anyone else, except blu.
As mentioned, APPLE parabolic weekly & monthly charts are at EXTREME levels.
Unfortunately longs will be badly burnt.
H+S pattern (ie bearish) on APPLE daily chart in progress and downtrend on daily chart commences.
http://trader618.com
SP is now below 1440 at 1433. Wonder what Reggie M thinks of this little post / sarc// /