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Apple Computer: Why I'm Bearish For January And Beyond

Published 12/31/2012, 12:31 AM
Updated 07/09/2023, 06:31 AM
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We hold four Jan 590-600-610 butterflies @ 0.20. Although total risk is only $80 plus commissions, the dirge that has gripped Apple (AAPL) for the last two weeks has made our bet a longshot. As you know, I’d been looking for a strong year-end surge, mainly because bonus-hungry portfolio managers stood to make a pile of money if AAPL had finished Q4 on a strong upswing.

Their inability to make this happen is probably the single most compelling factor behind my very bearish outlook for January and beyond. If DaBoyz cannot in fact goose this stock — can’t even arrest its fall, actually — then they will be seriously on the ropes as 2013 begins. Accordingly, a target at 464.99 should be held in mind as a minimum downside objective for now (60m, A=635.38 on 10/22).

In any case, I’ll suggest offering the ‘fly to close for 0.25, a tad more than we paid for it. This order can stand as long as the stock is trading for $525 or less. The spread can certainly be sold for that much with a little work, but you’ll have to decide for yourself whether it’s worth it. You might also choose to hold the spread until stocks have had a chance to react to a fiscal-cliff agreement, assuming one comes.

We, Too, Can Play It Down to the Wire

I’m keen on putting out a short in the Diamonds, since my hunch is that 2013 is going to start with the nasty dive the stock market’s been postponing since the bad news on November 6 . It is the nature of the game, however, that getting short today will require sweating out a possible fiscal-cliff deal that could send stocks into a bullish spasm. While it would likely be fleeting, that would be of scant consolation to anyone caught in the short-squeeze.

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