Apple iPad Event at Yerba Buena Center for the Arts
Apple will introduce the next generation iPads in what is building up to be a large media event. That’s obvious given the Yerba Buena Center venue, and the number of invitations that have gone out.
We should expect major updates to both the mini and the full-sized iPad, but this will be more than just iPads, this will be a full-on onslaught for mobile technology. So, expect to see some really cool accessories, and software, as well as refreshes to the MacBook Pro line; including significant speed bumps and battery life extensions. And I wouldn’t be surprised if the finger scan technology spreads to laptops as well.
In my opinion, the big news will be the new capabilities of iPads. The flagship iPad will definitely get boosted to an advanced version of the A7 chip, and the iPad mini, may either get the A6X or the current A7. You can also expect a big boost an camera capability, and battery life. Another thing that might surprise some is smart covers that double as keyboards.
On top of all this great hardware goodness, there’s going to be a parade of developers taking stage to illuminate the directions Apple mobile technologies will be taking. Expect some fun stuff, and also some serious business stuff too.
The Trade
This is the tough part. There’s no telling how Wall Street is going to take this event, no matter how spectacular the hardware…mostly because their forward vision is extremely dimwitted and analysts are trying to save face, since all their morose projections for Apple were completely wrong.
So, I’m going to take a neutral to bearish stance on Apple, and prepare for a strong upside move, and a potential devastating downside move, which will eventually all level out over the coming weeks, and revert towards the current mean.
So to express this sentiment, I’m going to use weekly options in a double calendar spread. The cool thing about this trade is that I can risk very little to make a great return in a very short timeframe. With a little tweaking, I can construct similar trades that require a debit as little as 25 cents, to taking a $270 credit.
On the top side, the potential of these trades is anywhere from $600 to $800+. And that’s true whether Apple price goes up or down a full standard deviation. The theta decay and the difference in the implied volatility from the front week to the back week option supply all the horse power.
If Apple makes a strong move, you can achieve 30 percent of the profit potential by the end of this week, and 90 percent by the end of next week. That’s $800 on a $25 risk. Wow! The cool part is the first target is better than 85 percent probable, and the 2nd target is 65 percent. That’s a bet I’ll make every day of the week…if I could!
AAPL Double Calendar Weekly
Tell me, what do you think?
