Today an analyst at JMP Securities (interesting how its so similar to JPM.....accidental credibility perhaps) did the unthinkable and downgraded Apple. This sent the stock down nearly 5% on the day and spooked a lot of people. The time during options expiration week is pretty interesting, as well as how he ignored the insatiable demand for the iPad 2. But his reasons for downgrading are also very suspect. Here is a link to the WSJ discussing it.
He cites slowing sales growth at Hon Hai, the owner of the main manufacturer of some of Apple's products, as evidence that Apple is not producing as many products. Correlation does not imply causation. This is just ridiculous. You can look around at all the sold out iPads, the fact that Verizon now has 12% of the iPhone traffic and has only been selling them a month, and see that if anything, Apple is producing more!
His logic goes like this: Hon Hai's sales are decreasing. Hon Hai's makes Apple products. Therefore, Apple must not be producing as many products and sales will fall. How do we know they just aren't producing as many products for other people because people just want iPads and iPhones? Maybe they are just slowing down because of the Chinese New Year? Perhaps they just can't afford to make some products because they operate on razor thin margins and the drubbing of the dollar has made it unprofitable to make them anymore? I would take this report with a grain of salt.
I honestly would not be surprised if this firm has a short position in Apple and is just trying to manipulate the stock for their own gain. But it doesn't matter, because now you can get AAPL even cheaper!
Hopefully this guy will be banned from buying an iPad!
Also, here is why there is a shortage of iPads.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
Showing posts with label ipad 2. Show all posts
Showing posts with label ipad 2. Show all posts
Thursday, March 17, 2011
Sunday, March 13, 2011
iPad 2 News
If I do any more post about the iPad I'm going to have to rename the blog iPadanomics. But here's one more with links to relevant iPad 2 news.
- Forbes says 70% of iPad 2 buyers are new to the iPad
- How much does an iPad 2 costs to make? Depends on who you are asking, but the profit margins are pretty huge based on these estimates.
- Here's a movie created entirely on the iPhone 4 and edited on an ipad 2
- This guy paid $900 to be first in line to buy the new iPad
- This analyst says Apple sold 500,000 iPads this weekend
- Barely 20 years after the fall of communism, Russians are capitalizing on iPad 2 arbitrage
Here are a few ways to capitalize on Apple over the next few months:
1. Buy vertical call spreads. The Jan 12 345/355 call spread is currently going for around $500, and will return $500 if Apple is above $355 in January 2012.
2. Sell Apple cash secured puts. The Jan 12 $255 put is selling for $10.50. If apple is below $255 in January, you will have to buy 100 shares of apple for a net cost of $244.5. The $300 put is selling for $21.15. If Apple is over $300 in January, you keep the full $2,115 or have to own Apple for a net cost of $278ish. Seems like a good bet to me.
3. Sell covered calls on stock. Buy 100 shares of Apple and sell a Jan 12 $400 call for $24. You immediately lower your basis to around $327 and can still participate in any upward movement in the stock up until $400. Total return if Apple is above $400 in January is $7,300 per covered call or around 21%.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
- Forbes says 70% of iPad 2 buyers are new to the iPad
- How much does an iPad 2 costs to make? Depends on who you are asking, but the profit margins are pretty huge based on these estimates.
- Here's a movie created entirely on the iPhone 4 and edited on an ipad 2
- This guy paid $900 to be first in line to buy the new iPad
- This analyst says Apple sold 500,000 iPads this weekend
- Barely 20 years after the fall of communism, Russians are capitalizing on iPad 2 arbitrage
Here are a few ways to capitalize on Apple over the next few months:
1. Buy vertical call spreads. The Jan 12 345/355 call spread is currently going for around $500, and will return $500 if Apple is above $355 in January 2012.
2. Sell Apple cash secured puts. The Jan 12 $255 put is selling for $10.50. If apple is below $255 in January, you will have to buy 100 shares of apple for a net cost of $244.5. The $300 put is selling for $21.15. If Apple is over $300 in January, you keep the full $2,115 or have to own Apple for a net cost of $278ish. Seems like a good bet to me.
3. Sell covered calls on stock. Buy 100 shares of Apple and sell a Jan 12 $400 call for $24. You immediately lower your basis to around $327 and can still participate in any upward movement in the stock up until $400. Total return if Apple is above $400 in January is $7,300 per covered call or around 21%.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.