Exercising Patience

Apple (AAPL) is starting its pre-event, pre-earnings run after a severe beating last week. I will start building my earnings position today, but not because I fear that another premature earnings release will pop up. I expect to expand these positions or adjust them, but I want to have some open positions in play in case a move takes hold before we even see this week's catalysts. I am long 1x October $650 call, short 3x October $675 calls and long 2x October $685 calls for an average cost currently at $3.20. It is trading closer to $3.10 now. This position has a maximum value of $25 at $675, but it would be worth -$5 at $685. I am willing to take this risk as I hold long LEAP call spreads, which would do quite well if AAPL moved all the way to $685. On the put side, I will use the same ratio on an October $585-$570-$565 put combinations for $0.30. This has a max value of $15 at $570 and the same -$5 value at $560. My current downside targets are $590 and $570, so I am comfortable with the risk.

I'm looking to expand or get involved with a few names here, but patience is required. First is Fusion-io (FIO), which is a chart I mentioned last week. I reiterate that I would wait on this one. Earnings are due this week, so there is a wildcard forthcoming, otherwise I would say this is certainly headed for $25.50 to $26. This earnings, coupled with this chart, looks like it puts $30 and $22 into play, which would go a long way in resolving the current bearish pattern. It should play it out or eliminate it immediately removing some of the guesswork....219 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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