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Trade Idea Courtesy of Hamzei Analytics

TradingPub Admin | December 6, 2012

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Here is a trade idea shared by Hamzei Analytics:

December 5, 2012 (notification sent via Hamzei Analytics Twitter Feed on Wednesday at approximately 2:10 pm ct):

Apple (AAPL)

Bias: Bullish

Price target $580

We are bullish on AAPL and want  to create a  custom spread in order to take advantage of an anticipated move higher. . We believe AAPL could go higher into year end,  however, we want to hedge our position in case it goes lower from here.

BUY To OPEN 1 580 Dec-22 Call trading at $6.00

BUY To OPEN 1 560 Jan-19 Call trading at $22.70

SELL To OPEN 2 580 Jan-19 Calls trading at $15.20

AAPL is now trading at $549.39

This spread is now trading at $1.70

The Total Credit for this trade is $1.70

Day Order Only

This trade was sent out publicly as a Christmas bonus.

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As of of 9:00 am central time, Hamzei Analytics Sent out the following for Leg 2 of the Trade:

December 6, 2012

Apple (AAPL)
Bias: Bullish
Price target $580

This is our second leg of our AAPL trade.  We are adding into AAPL even though the stock is down 3% and our initial trade is in positive territory.

BUY To OPEN 1 540 Dec-22 Call trading at $13.45
SELL To OPEN 1 570 Jan-19 Calls trading at $12.00

AAPL is now trading at $530.00
This spread is now trading at $1.45
The Total Debit for this trade is $1.45
Day Order Only

This trade will be sent out publicly as a Christmas bonus.

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Update as of Dec 6 (11:00 am ct):

December 6, 2012

Apple (AAPL)

We are closing today's leg now trading at $3.30 or 347% profit. We will continue to hold our first leg for further upside. The reason we are closing one leg is we want to book some profits.

SELL To CLOSE 1 AAPL Dec-22 540 Call trading at $23.45
BUY To CLOSE 1 AAPL Jan-19 570 Call trading at $19.80

AAPL is now trading at 550.67
This spread is now trading at $3.30
The Total Credit of this trade is $3.30

GTC Order

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Here are a few notes sent out about the trade by Hamzei Analytics:

Today we sent out a complementary options trade for AAPL.  We have received a few comments from non-subscribers regarding the margin requirement for this trade.

As you all know AAPL is an expensive stock (dollar wise).  Therefore, the trading in AAPL, by its very nature, is not cheap.  Do we think AAPL will rise from here?  We think so but no one can be certain 100%.  That is why we chose a conservative strategy.  We like its risk/reward parameters.  Our trade today was a combination of a Time Spread (Dec-22 580/Jan-19 580 Calls) and a Vertical (Jan 560/Jan580 Calls).

This trade does NOT include a short naked call.  The reason is because both of our short calls are hedged against long calls.  Some brokers might consider one of the Jan 580 calls as naked.  Their reasoning is that one of our longs will expire before the short Jan 580 Call.  With that said, depending which broker you use, they may require a margin balance from your account as collateral in case you do not adjust/close the position after December Option Expiration.

Obviously having a sophisticated broker is critical in this business.  And, Margin Requirements vary depending on what broker you use.  Prior to placing any trades, you should consult your broker regarding their margin requirements.

In order to avoid any margin restrictions, ideally, we recommend our members to have a minimum of $25,000 in risk capital in their account..

Any questions about the trade, please feel free to contact us.

Cheers,

The TradingPub
“Trade, Talk, Learn – Cheers to Success”
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Risk Disclaimer: Past performance is not indicative of future results. Futures trading involves substantial financial risk. Views of guest commentators do not represent those of TradingPub.com. Article intended for educational purposes only and not meant in anyway as a solicitation to buy or sell certain securities. Please consult your personal financial adviser before using this information for your own trading purposes.