In the previous post I had proposed a strategy to take advantage of the current conditions, providing that the near term there may be some price fluctuation with AAPL, but looking further out  there’s generally a bullish sentiment. And the strategy I suggested was a Bull Put Spread with Puts that expire in Sep 2008. The idea is that we would let the time value work for us to make the trade profitable. 

The following strategies assume that the Put Spread trade was successful, and the price of AAPL has advanced some, perhaps to $173. At this point AAPL should be above its 20 and 50 day moving averages, which should provide good support, and make AAPL a good candidate for the swing trade. But given the market conditions, and recent sideways action, there may be short pops before the big move. So, you might want to take a guarded position where you can minimize the amount of capital you expend, yet execute a trade that will provide a good return on a short advance. Consider the following option chain:

The strategy to employ in this situation is a Bull Call Spread. It’s very similar to a Put Spread, however this is a net debit trade. Meaning the broker will be taking the premium from your account. Here are the potential results of the trade.

I used a simple Excel spreadsheet to calculate this Call Spread. It also contains the calculations from the previous post that described a Bullish Put Spread. You can download it by clicking here.

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