Handicapping AAPL Earnings Report

Focus: OPTIONS

Mike Scanlin Image Mike Scanlin CEO, BornToSell.com

One of the most anticipated events in this earnings season is Apple’s holiday earnings release after the market closes today. Mike Scanlin of BornToSell.com outlines five ways to deal with the issue.

This is a continuation of a covered call trade we started on December 5, 2012, on AAPL.

We've now had six sets of weekly calls expire out of the money on our AAPL position. As of Jan 19, 2013, AAPL is below our Dec 5 purchase price by about 51 points (closed at 500 on Friday). However, we've lowered our basis between 54 and 68 points by selling weekly calls, so the trades are currently profitable.

Here is a recap of what we've done to date. We purchased AAPL at 551.57 on Dec 5. There were two strikes suggested, a 535 and 540, so we are tracking two separate trades.

If you wrote the 535s on Dec 5, this is where you are today:

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If you wrote the 540s on Dec 5, this is where you are today:

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On Friday, AAPL closed at 500 and your adjusted cost basis is either 482.97 (if you started with 535s on Dec 5) or 496.97 (if you started with 540s). You're still in the black but significant risk exists this week....

Moment Of Truth
AAPL announces holiday quarter earnings Wednesday, Jan 23, after the market closes.