Betting on a stock this volatile on a day like this is an exceedingly dangerous game
Trading in Apple (AAPL) was halted on July 19 last year, just before the company released its third quarter earnings report. When trading re-opened, the stock immediately jumped nearly $23 (6%). On October 18, when Apple released its fourth quarter earnings, the stock fell more than $33 (8%) in after-hours trading.
So as you can imagine, there's a lot of interest in what's going to happen at about 4:30 this afternoon when Apple announces the results of what is widely expected to be the best quarterly earnings report in the company's 36-year history. (See here.)
And there's no shortage of free advice. Dozen of Apple-related articles have been posted on Seeking Alpha over the past few days, most of them suggesting complicated derivative plays. Sample headlines:
Options: How To Maximize Your Gains On Apple's Earnings
Should You Sell Apple The Day Before Earnings? History Says Yes
A Cautious But Profitable Earnings Trade
A Safer Way To Bet On Apple's Earnings
Apple: Have You Considered Weekly Options?
Selling Apple Options: When Implied Volatility Doesn't Mean Squat
On his widely-watched Mad Money show Monday night (video here), Jim Cramer advised day traders to sell Apple ahead of earnings while OptionPit's Mark Sebastian suggested that investors buy Apple calls. "From my perspective," quipped a regular on Investor Village's AAPL Sanity board, "both of them seem to be attempting to lead the sheep to the wolves."
The fact is, any large movements in Apple shares in after-hours trading today are likely to be driven by high-frequency computerized trading programs that buy and sell enormous quantities of stock in milliseconds. Trying to beat them at their own game is a fool's errand.
Whatever happens, we'll be watching. Tune in here after the markets close for our blow-by-blow report.
When the rest of the market is tanking, the company's shares offer a relatively safe haven
On Monday, when the Dow opened down $250, Apple (AAPL) rose $11.13 (2.78%) to close at a new record $411.63. On Tuesday, Apple opened at $415.35 and hit $422.86 shortly after noon.
UPDATE: Apple closed Tuesday nearly where it started, at $413.45, up $1.82 (.44%) for the day.
To put Monday's close in perspective:
Apple shares were up MORE
Philip Elmer-DeWitt - Sep 20, 2011 7:33 AM ET
If you're looking for evidence of manipulation, Friday's close was picture-perfect
Volume rose sharply and Apple's share price collapsed in the last half hour
"The easiest way to think of options," wrote The Market Skeptics's Eric deCarbonnel in a prescient 2009 post, "is as a type of insurance. Investors pay a premium to protect themselves against sharp swings in the market. If these sharp swings don't happen, those selling options (option market MORE
Philip Elmer-DeWitt - May 15, 2011 9:32 AM ET
Jason Schwarz's "Seven Reasons the Shorts Love Apple" is an investor's must-read
Source: TheStreet
"If you can keep a good stock down," writes Jason Schwarz, "then you are able to load up for the ride back up. It's like a slingshot -- the harder you pull, the more propulsion you generate."
Schwarz, an investment analyst with a knack for self promotion -- through a newsletter, an e-book, and a new hardcover -- MORE
Philip Elmer-DeWitt - Dec 20, 2009 6:41 AM ET
Apple fell 2.6% on Dec. 1 in an ugly close that left investors deeply suspicious
Apple had already dropped sharply twice on Tuesday -- once at 10 a.m. and again at 3:25 p.m. -- when, 12 minutes before the close, the volume of trading suddenly spiked and the stock went into freefall.
More than 3.5 million shares changed hands in a fury of last-minute trading, and when the dust cleared, Apple had MORE
Philip Elmer-DeWitt - Dec 2, 2009 1:14 PM ET
The opportunity to cash in on the iPhone's subscription accounting has mostly passed
Source: Deagol's AAPL Model
Apple (AAPL) is scheduled to report its fiscal 2009 earnings next Monday, Oct. 19, and in the days ahead investors can expect to hear a lot about the new accounting rules that will allow Apple for the first time to book iPhone revenue when the sales occur, rather than spreading it out over eight MORE
Philip Elmer-DeWitt - Oct 11, 2009 8:34 AM ET
With Apple (AAPL) closing at $184.55 a share Thursday -- up 1.47% to hit a 15-month high -- it's probably time for the legion of analysts who follow the stock to start rethinking their published price targets.
The current high target, $264, was set on air Tuesday by Mad Money's Jim Cramer. But he's more showman than analyst -- even if he did trigger a 6.71 point (3.83%) rally the next MORE
Philip Elmer-DeWitt - Sep 17, 2009 9:40 AM ET
Jim Cramer. Photo: CNBC
Apple (AAPL) shares rose 1.3% in after-hours trading Tuesday after Mad Money host -- and confessed Apple stock manipulator -- Jim Cramer raised his price target from $200 a share to $264.
Shares opened Wednesday at $178, up 1.6% from Tuesday's close, and by 12:25 p.m. were trading at $182.72 on high volume. The stock ended the day at $181.87, up $6.71 (3.83%), its strongest close since MORE
Philip Elmer-DeWitt - Sep 16, 2009 10:20 AM ET
A pair of videos appeared on the Web Tuesday that offer a two-part primer on how to trade Apple (AAPL) shares based on technical analysis -- the science (or pseudoscience) of predicting what a stock is about to do based on what it did in the past.
If you're not familiar with such concepts as support, resistance, breakouts and Fibonacci retracements, you can learn a lot from each of them.
Unfortunately, the MORE
Philip Elmer-DeWitt - Jun 3, 2009 7:28 AM ET
Tuesday's iPhone 3.0 special event drew the biggest headlines, but that wasn't the only Apple (AAPL) news that broke this week. The highlights:
HD movies on iTunes: On Thursday, the company announced that its collection of high definition movies, hitherto available only through the Apple TV set-top box, can now be purchased or rented on the iTunes Store for viewing on a Mac, PC or widescreen TV. Is this a sign MORE
Philip Elmer-DeWitt - Mar 20, 2009 10:41 AM ETEvery morning, discover the companies, deals and trends in tech that are moving markets and making headlines. SUBSCRIBE
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| Company | Price | Change | % Change |
|---|---|---|---|
| Bank of America Corp... | 7.95 | -0.16 | -1.97% |
| Microsoft Corp | 31.27 | -0.17 | -0.54% |
| Ford Motor Co | 12.28 | -0.25 | -2.00% |
| General Electric Co | 19.39 | 0.17 | 0.88% |
| Citigroup Inc | 32.36 | -1.00 | -3.00% |
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 12,938.67 | -27.02 | -0.21% |
| Nasdaq | 2,933.17 | -15.40 | -0.52% |
| S&P 500 | 1,357.66 | -4.55 | -0.33% |
| Treasuries | 2.00 | -0.04 | -1.96% |
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