NaughtyPines

AAPL EARNINGS PLAY

NASDAQ:AAPL   Apple Inc
AAPL             announces earnings tomorrow after market close, so look to put on a play before the end of NY trading.

Here are two possibles:

AAPL             Feb 5th 84/89.5/110/116 iron condor
Probability of Profit %: 66%
Max Profit: $93/contract
Buying Power Effect: ~$507
Break Evens: 88.57/110.93

AAPL             Feb 5th 89.5/110 short strangle
Probability of Profit %: 68%
Max Profit: $142/contract
Buying Power Effect: ~$1600
Break Evens: 88.08/111.42

Notes: With the iron condor, I'm mixing things up a bit with wing widths in order to produce a $500 buying power effect setup; for a person with a $10k account, that setup would represent a 5% BPE for the trade ... .

As usual, strikes may require some tweaking between now and NY close depending on price movement of the underlying.

As with all earnings plays, look to take the entire setup off at 50% max profit and redeploy the buying power elsewhere.
Comment: There's enough credit to be had here, but not enough volatility in the underlying to ensure a rapid contraction post-earnings. Point in fact, there could be a volatility expansion post-earnings from here, which is generally what I do not want to see in an earnings play. So, it's a pass for me this time around ... .
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