For every dollar in a short sale of AAPL shares you buy an equivalent amount of SPY (S&P500).
Risk: 3% Upside: 6%
In other words, I believe that AAPL will underperform the stock market in the near term.
Tim 1:06PM EST, Jun 1 2012
Comments
charttrader
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Followed.
timwest
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AAPL is the S&P500 (SPY) right now. With a lot of money to be made in arbitraging the spread between these two instruments.
charttrader
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Could you please demostrate this on the chart? Thanks
timwest
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The intraday data doesn't go back to June 1st... but it does go back to June 7th. Just hit the "make it mine" button and then go back as far as you can and see how AAPL underperformed SPY for the time frame I had mentioned. Daily will work fine too, but realize you can only graph a line chart of SPY against a bar chart of AAPL, so it is deceptive. 2 bar charts are better than trying to analyze to line-charts because the close is only 1 price out a many in a given day.
timwest
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Set your chart to 30 minutes or 65 minutes (that way every day is just 6 bars, I don't ever suggest using hourly charts because 1 bar will be 30 minutes and the rest will be 60 minutes). You will see how AAPL underperformed from that comment forward and you'll see just how correlated AAPl was to the overall market.
timwest
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This worked for nearly a 3% return. This morning's gap-up in AAPL ahead of their new product announcements today has brought the performance back in line. These trades keep risk to a manageable minimum, from my perspective. Cheers. Tim