Apple Inc. (AAPL)’s Option Play for This Week Expiry

Apple Inc. (NASDAQ:AAPL)‘s stock has seen a straight rise up after breaking below the $97 mark mid-afternoon on Friday, it seems the stock won’t give up till it reaches the century mark. After seeing $55 levels in mid-2013 Apple Inc. (NASDAQ:AAPL)’s stock has seen a strong rally, which became stronger since mid April of this year when the stock used to trade at around $75. Many people are betting that Apple Inc. (NASDAQ:AAPL) will be breaking its all time high very soon, but will it?

Dan Passarelli from Market Taking Mentoring discussed his strategy on Apple Inc. (NASDAQ:AAPL)’s options on Bloomberg, recently.

“This use is weekly options. So, the trade is in the August 22nd expiration, that expiry is at the end of this week. Here’s what it is, it’s buying the Apple Inc. (NASDAQ:AAPL) $98, $102, $100 Call Butterfly for $0.60 or better […] it has to do with the time horizon on my forecast here, right now there is a great deal of open interest at the $100 strike. If you look at the chart of Apple Inc. (NASDAQ:AAPL), we have seen higher highs and higher lows, the stock seems to be on its way right to a $100 and we have a pretty good chance of getting there by the end of the week […],” Passarelli said.

Passarelli’s trade, Call Butterfly, is basically to buy one Apple Inc. (NASDAQ:AAPL)’s $98, August 22 expiry Call option along with a $102, August 22 expiry call option and selling two $100 August 22 expiry Put options, the total outflow while executing this strategy must be $0.60 or lower.

“This ends up being a very low risk trade, I risk $0.60 a contract, but I could make up to $1.40 a contract. So, its a highly leveraged, low-risk short term trade […] and the ideal situation is that the stock is at $100 at expiration, but I will take anywhere close,” Passarelli added.

Disclosure: None