Go Apple go!
Once again, Apple (AAPL) puts in a stunning quarter and we couldn't be more pleased as AAPL is one of the largest positions in our Long-Term Portfolio as well as our Options Opportunity Portfolio. Our target in the LTP is $130 by next January and, if we hit it, our net $14.50 Jan $100/130 bull call spread (from 10/20) will return $30 for a very nice $15.50 (107%) gain. There's no margin in a bull call spread, a nice options trade for beginners however, we got a little fancier in the OOP and our position looks like this:
The net cash outlay of the position was $22,650 and, if all goes well, it will pay $90,000 at $130 for a $67,350 profit less whatever we owe the short callers, probably $20,000 at $130 so net/net $47,350 profit is still over 200% back on cash on the biggest position in our portfolio – we can live with that!
AAPL was our Trade of the Year in 2013, 2014 and 2015 but last year it was Natural Gas (UNG) and this year it's Silver Wheaton (SLW) and both, of course, are in our Options Opportunity Portfolio as well as our Long-Term Portfolio. Our 2015 Trade of the Year on AAPL just expired with AAPL right at our $120 target on Jan 20th and that cashed us out of that one at the full $90,000 from our initial $8,000 cash outlay (we were more aggressive with put sales then) for a very nice $82,000 (1,025%) profit in less than two years.
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Having hopefully established my bona fides as an Apple bull, let's talk about why they are no longer our Trade of the Year. 70% of the company's sales are iPhones, that's a little worrying but, then again, if my company had to have all its eggs in one basket – that's a pretty good one! Bears use it as a knock but 90% of GMs sales are cars, 90% of Nike's sales are sneakers… We get it, AAPL is not GE – move on.
What is more concerning is that, despite Apple's $78.3Bn quarter