Q. My sheriffs dept is transitioning to the iPad. All detectives are now issued one and don’t even use their desktops anymore. They can do work anywhere with no need to stop by the office. There is talk of replacing the car computers w iPads. Our iPads can do everything the old car computers can do, but much more reliable because of the cellular network they operate on. I think this is the future for a lot of police/ sheriffs dept. Saves everybody time/ money.
A. That’s a great point and one that’s much overlooked. As government budgets work on cutting costs, they’ll find the iPad/iPad Mini and other tablets running apps to be 90% or cheaper than spending on dedicated gadgets/laptops/desktops/readers/etc. Healthcare apps, security apps, military apps are all the future and they’ll all be on Apple/Android and maybe Windows platforms.
Q. Cody: you mentioned that ” I think we can expect some more wild swings in AAPL for the next week or so at least.” and AAPL is way down now. Curious to know how did you say that? Could you please elaborate? Thanks!
A. The part right before what you quoted is this: “Remember when Apple was at $700 and I pleaded with you guys to remember how painful a random sell-off can be so that you would trim some? That pain is still fresh in every AAPL-long’s mind…” And that’s a big part of why I thought we might get another downdraft like this — psychology of the weak-minded Apple longs who I figured after having ridden the crash from $700 to $510 were likely to truly panic themselves out of any AAPL they had left the next time it sold off. And indeed, while all the pundits and traders try to explain today’s “shocking/random” 5% decline in AAPL, I would argue, as I did at the time, that the set up was conducive to such a near-term sell-off when it had spiked to $590. Now I’d expect iPad Mini/iPhone 5 trends into the xMas season are what will drive the stock into year-end. If they are as hot as items as I think they are and Apple is able to obtain enough supply, we’ll likely see numbers raised for the quarter. Already saw Shaw Wu from whatever sellside firm he’s at these days up his iPad Mini and iPhone 5 estimates for the quarter to “above consensus”.
Q. Cody do you think COR clearing house raising their margin requirements from 30% to 60% will affect AAPL long term?
A. No, long-term, intermediate and even shorter-term such margin requirements being raised won’t matter to Apple’s stock price at all, in my humble opinion. It might be a part of this recent $40 pullback, but the only thing that will matter in getting Apple to my long-held $1000 price target is continued earnings growth. And as I mention above, the near-term action will likely be dependent upon the xMas iPad/iPhone selling season’s trends.
Thanks Cody! I love the service and all you do for us.
Q. Hi Cody, I have some 12/22 AAPL 600-650 Calls I bought before the last ER. Is there still a chance of it crossing the 600$ mark in the next week or so with the current volatility of the stock? Should I wait or take the loss? Thanks!
A. Ooh, man that’s always a tough call to make when your back is up against the wall on expiration like that. There’s always a chance that AAPL could spike 7% tomorrow taking it above $600 and that next week we get a bunch of analysts raising their estimates and the stock keeps rocking from there into your expiration date. But I would want to bet on that, you know? I’m a buyer of AAPL today, not a seller, so I guess I’d probably recommend waiting to see if you can get a least some pop tomorrow or Friday before starting to trim down and even then I wouldn’t just sell all of the calls at once, but rather stick to the tranche method even in this case. No easy answer for you though, sorry.
Q. Is Apple a buy at this level?
A. As mentioned here and in my Trade Alert earlier today, yes, I’m actively buying back the AAPL calls we sold when it was at $590 and I’m even bidding under the market for some more. 🙂
Q. When you say you are bidding under the market with AAPL calls, do you mean you are buying $700 June 2013 calls?
A. What I mean any time that I write “bidding under the market” is that I’m putting in some Day Orders with my bids below whatever the current bids are. So if an Apple call option is trading at, say, $20 each, and I want to bid under the market in case there’s a downdraft before the close, I might put in a bid for those call options at, say, $18 and if the stock were to drop I might get filled on that order and if it doesn’t drop, then those orders will cancel themselves at day’s end.
Q. Hi cody, you still keep thinking AAPL will reach 1000 during 2014? Thanks!
A. Yes, I’m still expecting a four-digit stock price for Apple sometime in the next 24 months.
Q. Hi Cody, thanks for all the work and good luck taking action with the PTSD (been there, done that, much luck). What do you think of FIO now. Would you be ‘pounding the table’ on it here?
A. Thanks for the kind words. Did you see I shared your previous email with everybody today? Click here to read the post. I do like FIO just fine here, but as I’ve said from the beginning of this investment, we need to consider it more like a potential 5-10x bagger venture capital long-term investment with a potential for a 50% loss or so if it doesn’t work out. $22 or $25 or $18 won’t matter much if you’re looking for a 500-1000% gain.
Thanks Cody, I do remember your words on FIO, just antsy! No, I didn’t see the email until now. You’re too kind! I really mean it that you have helped so much with my market psychology, and making me money. If I had people I knew that invested, I would gladly send them your way, but, alas, I don’t. Hard to invest on a military paycheck, but I’m not complaining! I’m luckier than many. Sorry for the jabber. Thanks everybody on the boards for your insights.
First time I’ve been able to be on the chat, so I’ll shut up!
Virtuous cycle gets started, because you telling me that I’m helping you with your PTSD probably helps me with my own PTSD which probably helps me talk about my own PTSD which probably continues the cycle.
Q. Cody how do you feel about the SNDK and FFIV Calls for Jan?
A. I don’t know, that’s cutting it awfully close without a clear, specific catalyst for each stock. I do think Sandisk is a better trade right now, and I added to it today, but I gave myself much more time than just 7 weeks, as your Jan trades would be.
Cody the calls I made for SNDK and FFIV for Jan 13 were calls you recommended. FFIV Jan 13′ 130 strike – SNDK Jan 13″ 50$ strike.
I don’t think I’ve bought any Jan 13 calls in either of those in a long time, no?
Yes, it was a long time ago. What do you recommend I do. I have a contract on each and down heavily.
Oh, I thought you were looking to buy them. First, I will say I was wrong on the FFIV trade and that sucks for both of us. I think I might have trimmed some of those Jan 13 SNDK calls when the stock had run for us and we might have made some profits on that one overall, even as I do still hold a small position in the SNDK and FFIV Jan 13 calls myself. I don’t think we’ll make anything on them and they’re pretty much worthless already, and I hope you’ve truly been following my lead and spacing out your buys with mostly common stock and not just options so a loss like this won’t crush you. Good luck.
Cody there is no trimming on options if I own just 1 contract, correct?
Wow, I thought I’d been much more explicit about the need to NEVER TRADE OPTIONS IF YOU CAN’T AFFORD TO LOSE EVERY DIME YOU PUT IN ONE OF THOSE TRADES. Options are a tool to complement our stock market returns over time and to help us hedge our risks in the portfolio, but they should NEVER be bought if you can’t scale into them and scale out of them and they should ONLY BE USED TO COMPLEMENT THE PORTFOLIO, not to strive for “alpha” (gains) to drive the portfolio. Please go re-read the options chapter in Everything You Need to Know About Investing. I’m not trying to scold you and if you’ve learned this lesson about options trading and the risks involved with it with just one option in two different stocks, it will probably be one of the best values in trading lessons in your career. Good luck for real, man.
Q. Hi Cody, I’m a new subscriber. What is your feeling on RIMM. What is the best way to play this stock, longs or options?
A. Thanks for joining! I think RIMM is tomorrow’s Palm. Remember, Palm when it had serious smartphone marketshare back in like 2006? Bono even invested in it. Then the stock collapsed and eventually was bought by the same dummies at HPQ who brought shareholders the Autonomy debacle. I’d bet that RIMM fades again and eventually gets bought by either Microsoft or HPQ or even Yahoo at some point. The RIMM platform is dead and they’ll never be able to make a new eco-system now.
Q. Cody: Interested in SSYS- the competitor to DDD after its own 15-17% slide from recent highs at 78? Its now the largest 3D printer company in the world after the recent closing of a competitor.
A. Yeah, I saw that big pullback at SSYS into the closing of their merger, but I’ve got a few reservations about the company here including the choice of headquartering in Israel, which makes it a foreign investment in my mind and raises the bar for gaining my trust.
Q. Hi Cody hope all is well with you. Nice job on FB! Do you agree with Marcin about HPQ in that the free cash flow makes it an undervalued buy?
A. Yeah, the FB trade has really turned out nicely profitable and I’ve already locked in some huge gains. Don’t forget to do so too if you caught the moves with me. HPQ is definitely cheap and I think IBM or SAP or some Chinese firm will come in and bid for it if it falls much more or even if it stays down here. That said, I can’t say I’ve got much “hankering” (as Grandpa Johnson Stearns would put it) to buy it.
Q. Hey Cody, I wonder if you have any thoughts on YHOO. Also, do you think there is any change MSFT would look at them as a strategic acquisition (as they considered back a few years ago)?
A. I think Yahoo’s got some momentum behind it right now and it could get to $20, but I don’t think there’s much long-term upside and I don’t think Microsoft will come back to bid for ’em. Maybe Baidu someday?
Q. Cody, are you planning to add some more BIDU now (since it’s down from 94 when you bought) or do you have any change in your standpoint? Thanks!
A. BIDU was a foreign-based company’s stock long for me, and I’m already obviously regretting it, as it’s not been a profitable trade, even though it remains one of my smallest positions and conceivably giving us a great opportunity to scale into more while it’s down as we’ve been patiently waiting for this kind of a down move before getting serious about buying it. I don’t know though, I’m leery about adding to it just yet and while that might be a contrarian indicator, I’m not looking to force any trades. If I sound a bit flip-floppy on this answer, it’s because I am.
Okay, folks, that’s another weekly dose of Q&A and I’m, as usual, totally blitzed mentally when we finish up here. Thanks and see ya later.