An effective, cheap hedge on Apple shares into earnings, according to Mike Khouw

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The options trader describes a 'put spread collar' trade on Apple.

Apple shares just hit a new all-time high last week, but some mounting concerns could weigh on the stock leading up to and after its earnings report later this month. I'll describe a way to hedge an Apple position. Apple is the largest publicly traded company in the world. The company designs, manufactures, and markets smartphones, personal computers, tablets, wearables, accessories, and related services.

mountain Apple, YTD I realize Apple is possibly the most broadly owned publicly traded stock in the world, and I expect it will remain one of the most profitable for many years, but I also feel that the upside from here is likely to be more muted or incremental. Therefore, I would offer the following "put spread collar" idea to hedge a modest downside move following earnings by purchasing a put spread against a long stock position financed by selling an upside call. Sell Nov.

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Click here for the full disclaimer.Michael Khouw

 

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