Tech giant Apple Inc (AAPL) is currently trading at $527.40 down around $2.45 in today’s session after reporting a better than expected fourth quarter earnings. The announcement has failed to impress investors and initially sent the stock spiraling as low as $503 in the after-hours session. Despite reporting record iPhone sales earnings per share fell nearly 8.5% over the same quarter last year. AAPL also released guidance for Q1 of 2014 with revenues falling near the high end of their previous estimates. AAPL has been in the news in recent weeks as a new line of iPads and Macs were introduced last week and as activist investor Carly Ichan continues to pressure AAPL CEO Tim Cook for a $150 billion stock buyback. Margins continue to be a concern for AAPL investors as net margins on new product lines introduced last week remain unknown. With uncertainty and the possibility of a buyback or deal with carrier China Mobile it seems likely that AAPL will continue to trade in a range. We will look at a trade setup that can profit if AAPL trades in a range while still giving the stock room higher or lower.
Trade: Selling the AAPL Dec 485-480 Put Spread and the 565-570 Call Spread for $3.45 total credit
Risk: $155 per 1 lot
Reward: $345 per 1 lot
Breakeven: $481.55 and $568.45
