Apple (AAPL) reported earnings for its fourth fiscal quarter Monday after the close, beating street expectations with $37.5 billion in revenue and $8.26 EPS. Profits shrank from $8.2 billion for the quarter one year prior to $7.5 billion. The company reported record iPhone sales of almost 34 million units (a significant increase from the near 27 million sold in the same quarter for 2012). The company also released guidance for Q1 2014, with revenue falling at the high end of the previous guidance range.
THE NEWS
The past few weeks have been busy in Cupertino, first with the announcement of Angela Ahrendts joining up as head of retail, in a move that will assist Apple’s transition to a luxury retailer that happens to sell technology devices. Last Tuesday, as predicted, the company announced a new line of iPads as well as updates to its personal computer line. Presumably, some consumers were postponing iPad purchases in order to get their hands on the updated device, as year over year sales in the tablet category were flat at 14.1 million units on the earnings call. Finally, Carl Icahn published a letter he wrote to Tim Cook asking for a $150 billion stock repurchase at $525 per share.
In the near-term, I expect we will see Apple shares continue to rise in price modestly through year end.
MY TRADE
Buy the AAPL Dec 545-560 Bull Call Spread for about $5.00
Risk: $500 per 1 Lot
Reward: $1000
Break-even: $550
GREEKS OF THIS TRADE
Delta: Long
Gamma: Long
Theta: Short
Vega: Long
This trade offers 2:1 on my money, and leaves me 52 days until expiration.
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