Month: October 2012

AAPL Earnings trade – Strangle

Yesterday, we identified a nice opportunity to trade AAPL earnings. We sold a strangle at the 570 and 650 strike prices, but the important decision was the choice of expiry series. We could have played the weekly series that expires today, but this would have exposed us to large losses if AAPL made a big move. Instead, we noticed that Implied Volatility had also spiked up in Nov1 weekly series to 47%.

Trading AAPL Earnings today

Apple ($AAPL) releases quarterly earnings after the closing bell today. Most traders intent on trading $AAPL earnings rush to the Option series closest to the earnings event because the “uncertainty” around the earnings event marks up the premium of these Options. It is tempting to sell premium in this series because Implied Volatility is so high, and premiums are juicy.

Ancestry.com acquired for $1.6 Billion – What ??

  Poring through the financial news this Monday morning, something caught my eye. www.ancestry.com (ACOM) was being acquired by a European private equity firm for $1.6 Billion. Wow – ancestry.com for 1.6B ?? That seemed like an awfully large number for what (in my opinion at least) was a very interesting website but used purely …

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Lowest weekly jobless claims in 4.5 years – or is it ??

This post is not meant to be political, but a political undertone cannot be avoided.  The headlines in the LA Times Business section online proclaimed “New jobless claims fall 30,000” to 4.5 year low at 339,000. As the lowest weekly jobless claims news broke out, the S&P Futures spiked and stayed higher even after the …

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Facebook withheld material info before IPO

We covered Facebook’s strategy on Mobile advertising and Search initiatives here a couple of weeks ago, and why we felt Facebook (FB) stock bump up to 22 was temporary. As of today, FB is back below 20, and those Put Options mentioned in the post are looking quite good. Yesterday, there’s a real damning article on Bloomberg on how FB actually withheld material information in the days leading up to its IPO.

Corporate Debt markets are cheap right now

If you’re a large market-cap investment-grade company in the US, this is about as good a time to hit the corporate debt markets. Interest rates are the lowest they’ve probably ever been, and the spread between Corporate and Treasury debt is also the lowest. This spread represents the additional risk that investors assume to hold Corporate debt as compared to US Government debt. If you recall, during a brief moment in August 2011, when the debt ceiling deadlock resulted in Standard & Poors lowering the US credit rating, a select few corporates like Microsoft (MSFT) were actually yielding less than Treasuries. Investors were suggesting that MSFT was less of a risk than the US Government 🙂

Stop Losses and Flash Crashes – investors be warned

The topic of Flash Crashes is back in the news. On Friday, India’s National Stock Exchange (NSE) experienced a flash crash that took the NIFTY 50 Index down 16% in an instant. Most stocks in the Index experienced crashes of between 15 and 20%. Circuit breakers that were supposed to be triggered at a 10% drop did not work, and they ultimately kicked in after a few minutes when the index had dropped 16%. Markets were halted,