As you all probably know by now, Apple is set to report their earnings after the bell tomorrow. Most on the street expect extremely strong earnings but thats not the real question. The stock has gained over 50% this year and the stakes couldn't be higher tomorrow. Not only does Apple have to beat expectations, but they have to beat them across all categories for the street to justify another lift in share price. Personally I think that apple shares will continue the rise and may even touch $330-$335/share after hours. However, I am definitely recommending protecting your net-long position against any selling of the stock.
I am particularly interested in the 330/340 November Call spread costing us close to $2.6. This means that if apple was to close above $340 at November expiration, we would profit almost $7.90 from this trade. Who doesn't love 3x plus trades?!! But thats not all. I am tempted to purchase some downside puts to participate (and protect our call-spread) by purchasing downside puts on the weeklies at the $290 strike just costing $2.09. If the stock were to collapse on back of some unexpected news, we would stand to make a killing! Do I expect that to happen? Probably not. However, whats a few bucks to participate on any downside action in the stock :).
I would wait until the close to purchase my puts. A further run-up in the stock would probably result in the puts further cheapening. I don't see Implied Vol falling
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