Wednesday, May 18, 2011

Trade of the Day: Apple June $370/$375 bear call spread

The Trade
A trader put on the June $370/$375 bear call spread at $0.26 at 5,000 contracts.

The trader is making a large bearish bet on Apple. The trader is collecting a $0.26 credit of $95,000, which is the max gain. The max risk is also limited when the underlying stock price is at $375 and higher. The spread is profitable until the underlying breaks above the break even price level of $370.19. Apple gained 1.11% today and closed trading at $339.87.

The chart shown above is the Apple daily stock chart. You can see that Apple would have to make new highs for the spread to start losing money. The white line shown is the break even price level. It's possible that this can be a trader that is unwinding a previously held spread.

Apple traded 294,960 contracts today compared to average daily volume of 369,889. The 52-week range for AAPL is a low of $231.35 and a high of $364.90.

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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