We lost the loving feeling about AAPL. It’s just meh.
Apple Inc. reported earnings tonight, and no one cares. ?That’s not to say no one, ?but the big money is sitting it out. ?No one bought options into the event. ?IV30, ahead of earnings is in the 15th percentile, and is DOWN today into the announcement. Notice the difference in IV between this and the last earnings report.
When I see something like this I htink one of three things:
1. The stock has been in a down trend, and no one thinks its going to change, so no one is buying opitons : this is a recipe for another ugly report and points toward the stock dropping.
2. Sentiment is so bad that traders think they can sell anything in this name and win: ?this is where the stock could surprize and move. ?If this is the case,k which it might be.
3. The underlying theory around the stock has changed: ?i think this is the key. ?AAPL is a new stock and trades like a mature company. ?Smart money may have finally figured that out. ?If that is the case who knows the direction.
My belief is tha the premiums are cheap enough to take a stab in August. ?We put on a strangle swap in the strategy letter selling the July29 weekly against owning August which appears to have a favorable set up right now. ?I find it hard to believe that a lack of movement isnt alreayd priced in.
The Trade:
we like owning August and selling July 29 in a swap.