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Trade of the Day (AAPL) 9.11.2012

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TChart Bluee Bull Spreadrade:  Selling the AAPL Sep weekly 685-690 Call Spread and 645-640 Put Spread for $1.70 total

Risk: $330 per 1 lot

Reward: $170 per 1 lot

Notes:  Fading the Movement

UPDATE 9.16.2012 AAPL just ripped and ripped and ripped higher and higher.  These Spread went out $5 and time to move to the next trade.

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AAPL iPhone 5 Prerelease Summary 9.11.2012

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

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Halftime Report 9.10.2012

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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