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AAPL iPhone 5 Prerelease Summary 9.11.2012

The only thing traders want is price action, or perhaps not. Option traders have the luxury of not necessarily needing large swings in the equity. Historically, on iPhone announcement days AAPL has had a return of less than 2.9% 4 out of the last 5 event days (buying at the opening print and selling at the closing price). The September weekly options, that expire this Friday, are implying about a $21.00 move either way or about +/- 3%. This is according the at the money (ATM) straddle (50 delta or 50% probability of expiring in the money). This straddle is also about one sigma (68%) range that is expected too by the options.

The one time AAPL had a move over 2.9% on an iPhone day was back on January 9th of 2007; when the world was first introduced to the revolutionary device from Steve Jobs.  Interestingly enough, back on January 8th 2007, the day before the event, the ATM front month straddle (with 11 days till expiration) was about $7.50 or about 9% of the stock then ($85.47). It is interesting to note that the actual move was just under what the straddle had implied and was also inside the one sigma expectation implied. Do with this information as you please…while moves outside a probability cone may not probable they are still possible.

Statistics and options aside, there are still many details Wall Street needs in order to make their rational decisions tomorrow. Investors are expecting the following details…

 Display: Rumor has the iPhone 5 display height at 3.9/4 inches. This is according to “leaked images” of the iPhone 5. One should note that this popped up during the iPhone 4S launch too.

Slick Design: While most folks keep their iPhone in a protective case, it is typical AAPL fashion to have a design visually appealing, but still skinny.

Resolution:  The iPhone 4 & 4S have a 960×640 pixel screen and folks are looking for this to be upped to 1136×640 pixels.  Other phones have like the Samsung Galaxy S III and Galaxy Nexus have 1280 x 720 pixels and the HTC One has 540 by 960 pixels. AAPL needs to stay on top of this in order to theoretically dominate, for consumers will maximize their dollars or not and just buy the brand name.

Cords: Maybe new cords with less pins.

Mobile Communications Standards: Considering that the new iPad was 4G LTE; it may be safe to assume iPhone 5 will also be.

Battery: It has been difficult to please this crowd, for battery is always an issue…especially for those who use their phone a lot. There are reports of the Samsung Galaxy S III battery life lasting 30+ hours easily…hopefully iPhone can top this.  According to recent rumors battery capacity may be increased 40% and may be 15% thinner.

 PIN ACTION

 QCOM: iPhone 5 may have a QCOM 28 nanometer processors for 4G

BRCM: BRCM chip may source Wi-Fi, Bluetooth, and integrated FM radio chip.

CRUS & OVTI: Both issued bullish guidance recently; which may be a tell that they have an order from AAPL.

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Picture of Shells

Feel free to e-mail any comments, feedback or general inquiries: mark@keeneonthemarket.com

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Morning Rage 9.11.2012

Amazon.com, Inc. (AMZN | $256.67) is down less than a half of a point in pre-market trading. Amazon recently released the HD Kindle Fire, to be available at the end of November. Amazon is competing in a market where PC makers have continually failed to take the dominant position from Apple, which has more than half of the entire tablet market. Apple, Inc. (AAPL | 662.74), which is up 2.25 points in pre-market trading, gets its strength from having multiple matching devices that focus on simplicity for the user. Everything is fluid for the user, including the shape and style of all the products.

The one company capable defeating Apple in my opinion, Google (GOOG | 700.77), which is up almost 7.00 points in pre-market trading, has yet to stamp their logo on the outside of sleek hardware. I would also expect Apple to continue pushing other companies off of its platform by taking over their products and services. Apple will hold on to its dominance for a long time. However, the market is saturated with new iPhones and I don’t expect all of the iPhone 4 users to drop their somewhat new phones to get an iPhone 5, due to release Wednesday. This release will not be the same for Apple.

International trade data will be released today. The important data for US markets is the trade gap between exports and imports. I can’t be sure where the US is exporting to with Europe in a mess and China’s growth slowing for almost half of a year. The trade balance is said to continue higher with an estimate over -44.3 Billion. This report will be released at 8:30am EST. 

Alex Kalish has a masters in economics from Suffolk University.

Contact: alexk@keeneonthemarket.com

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Trade of the Day (SHFL) 9.10.2012

UPDATE 9.16.2012:  With a sell-off after Earnings, this stock has sold off and the Call Spread I sold has gone to $.10, good for a triple, but I will leave this trade on until Friday and hope it expires worthless.

UPDATE 9.21.2012  With the stock settling at $15.81, this Spread went out worthless, time to move to the next trade.

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Halftime Report 9.10.2012

Biggest movers in the S&P 500 so far today are Alpha Natural Resources Inc. (ANR) up 3.77%, First Solar Inc (FSLR) up 4.0% and Sprint Nextel Corp (S) up 3.9%. 

Pandora Media Inc (P) continues to slide today, down 4.39%.  Shares of the internet radio provider have been falling since Apple’s announcement of interest in the internet radio business.

James Ramelli B.S. in Finance from UIUC Email: james@keeneonthemarket.comFollow: @Jim_KOTM

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Morning Rage 9.10.2012

AIG is a half of a point higher in pre-market trading. AIG has a 52-week high/low of 35.36/19.18. The stock hit its yearly low at the end of September last year. Since July, the stock has floated above thirty dollars and in the last 3 weeks has been pushing thirty-five dollars, up almost 5% in the last month. AIG reported second quarter growth in early August, growing its insurance operating income 26%. Six major analysts have downgraded AIG’s outlook, as the Fed, possibly holding back dividends among other controls, will regulate AIG.

On Friday, Google (GOOG | 706.15[+6.75%]) broke above the $700 price line, a new four year high. The 52-week range for GOOG is now 480.60 – 712.25, a range of about $230. In pre-market trading GOOG is down less than a tenth of a point, with an overnight high of $709.72, currently sitting at $708.84.

US indices futures are all down. Dow futures have dropped 21 points, NASDAQ futures down five and a half, and the S&P futures down 3.25. News from the National Bureau of Statistics yesterday had exports rising lower than expectations and imports to china decreasing. Consumer credit reports come out today and international trade balance for the US is announced tomorrow.