Max Grigoryev
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Max Grigoryev in Fundamentality,

8% in a few days on AAPL

After the Apple's earnings call yesterday, I wrote about the low risk strategy with selling a strangle. Here I found another interesting opportunity to get some money from the Apple's options. 

The volatility of the stock is too high to ignore it. I have some doubts that the stock will go higher than $108 or lower than $86 by this Friday, therefore now we have the approximate price range. I just checked, what if I sell ITM call and ITM put and the premium I get for selling them is higher than the spread between strike prices. 

So basically the strategy looks like:

If the stock will be in a range I just mentioned ($86-$108 till the end of this week), then you'll get the following estimated returns table:

So as you can see, you are able to get around $800 by this Friday simply selling 29th April $85 Calls and 29th April $108 Puts. So if you own 100 Apple shares, you are able to get around 8.15% return in just a few days. This is a good momentum strategy to get some value from the jumped volatility. I'll check if this strategy works with some other high-volatile stocks. Amazon is reporting tomorrow, LinkedIn in a few days, so we'll check it out.

Given range of $85-$108 is based on the assumption that the stock will not move more than 10% over the next few days. If the stock dropped 6% after earnings, I can't imagine what can send the stock up or down more than 10% tomorrow or on Friday. 

Let me know what you think about this strategy