JDSoCal
Member
Aspiring oligarch
Posts: 4,182
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Post by JDSoCal on Nov 14, 2012 21:09:07 GMT -8
2) Nobody I've seen has reported the actual cannibalization rate of iPad Mini on iPad: 4.8%. So, iPad Mini margins are utterly irrelevant. And probably higher than most people think anyway Irrelevant? If Apple sells 10M iPad minis at an ASP of $350, and a margin of 30%, that means that out of ~56B in sales, 3.5B of that has only a 30% margin. If Apple sells 10M Minis, 80-90% of which are not cannibalizing anything, that's 8-9M products sold that would not have existed otherwise - or gone to another company - for the price of 1-2M slightly lowered margins. I'll take that any and all quarters. To paraphrase The Hustler, "30% of something big is better than 100% of nothing." Well, by that argument, the iPad 2 lowers margins. I happen to believe that Apple is losing sales, not cannibalizing sales at lower price points. Older CPU's and screens get cheaper to make every quarter. No F'n way the Mini has a 30% GM. I hate to cite the teardowns, but come on. Apple can make a lower res pad without cellphone radios and an older CPU with decent margins for crissakes.
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Post by mbeauch on Nov 14, 2012 21:28:01 GMT -8
Irrelevant? If Apple sells 10M iPad minis at an ASP of $350, and a margin of 30%, that means that out of ~56B in sales, 3.5B of that has only a 30% margin. Mark, what JD is getting to is that the mini GM can be 30% or 40%, the difference between those numbers will impact the EPS results, but by a small amount. As long as the sales don't cannibalize the ipad to much it is just additive. As for GM, the build estimates are around $200. That means the GM is above 30%. My fear was Apple would start at $249, now that would have sucked the life out of margins. At $329 Apple is doing just fine.
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Post by prazan on Nov 14, 2012 21:28:30 GMT -8
I think he is doing the self reflection thing and advocating patience for all of us. While we sweat it out here I believe he is in Thailand at a resort with his wife for a several weeks long vacation with daily swimming, massages and occasional looks at the market. Not to worry. Rosie, go to his site. His post today is concerning. I don't know Nick, except through his site and his posts on other boards, but I suspect he's getting his Zen on. He's "unloved" because his trades aren't yet working. Apple is "unloved" because no one is buying the stock. So rather than driving himself crazy with thoughts about what's wrong, he's going to the still center, where he'll wait until investing coherence returns. Of course, it helps to be in a deluxe resort in Thailand when looking for the still center. Everytime I even think of going to MY still center my toddler howls and the baby cries and then the wife slams the door shut.
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Post by mbeauch on Nov 14, 2012 21:32:18 GMT -8
Nick Nick Nick Not Nate, come on guys. Nick has a site, Nate does not. Nicks latest post seems to be more than retreating to zen.
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Post by chasmac on Nov 14, 2012 21:32:30 GMT -8
A decent SA article for a changeIf you're thinking of buying here, I would at least wait until Friday's FC talks in DC are over. Not going anywhere until we get some more clarity. (I think a loud message has been sent the last few days). Wish you all the best, tough to hear the stories.
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Post by payrolldude on Nov 14, 2012 21:35:24 GMT -8
Myself, I do believe that options can provide a HUGE profit potential right now. However, I am unwilling to put that much risk on the table. I am throwing every dime I can pinch into long shares. Eventually (probably soon) they will turn into real cash.
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mark
fire starter
Posts: 1,552
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Post by mark on Nov 14, 2012 21:39:26 GMT -8
Irrelevant? If Apple sells 10M iPad minis at an ASP of $350, and a margin of 30%, that means that out of ~56B in sales, 3.5B of that has only a 30% margin. If Apple sells 10M Minis, 80-90% of which are not cannibalizing anything, that's 8-9M products sold that would not have existed otherwise - or gone to another company - for the price of 1-2M slightly lowered margins. I'll take that any and all quarters. To paraphrase The Hustler, "30% of something big is better than 100% of nothing." I do not disagree! However, I am also trying to address the guidance for lower gross margin this quarter. I am a numbers and facts guy. If 1M iPad minis are sold instead of iPads, and if iPads have ASP of $600 and 40% GM, and mini has ASP of 350 and 30% GM, then that roughly translates to 14.3 cents lower earnings. If 2M iPad minis replace iPads, that's 28.7 cents lower earnings. But I completely agree. Because the other 8M iPad minis will ADD to earnings (by taking market share away from other 7" tablets)! It will, in fact, add roughly 89 cents to earnings. So, net net, the iPad mini will (using the very rough assumptions above) contribute about 60 cents to earnings by existing. And why would you say it is "higher" than we think? Doesn't the iPad mini have everything the iPad 2 has inside of it? But at a lower sales price. Well, by that argument, the iPad 2 lowers margins. I happen to believe that Apple is losing sales, not cannibalizing sales at lower price points. Older CPU's and screens get cheaper to make every quarter. No F'n way the Mini has a 30% GM. I hate to cite the teardowns, but come on. Apple can make a lower res pad without cellphone radios and an older CPU with decent margins for crissakes. I don't doubt that the iPad 2 has somewhat lower margins than the iPad. And the iPad has lower margins than the iPhone (which is the king of margin). ;D
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Post by nkmho on Nov 14, 2012 21:47:06 GMT -8
($66000-$71000)/2300 = $2.17 loss per spread An Apr 590/600 BCS goes for about $2.88 from what I'm seeing right now from my broker, so I'm guessing you paid $5.05 ($2.88+$2.17). That means you are down $2.17/$5.05 = 43% right now. Why do you divide by 2300. Damn I lost 43%, I shouldn't have asked lol. Its crazy cause I bought at 595, I guess thats options for ya. I divided by 2300 b/c you bought 23 contracts/spreads, and there's 100 shares/contract. As you've noticed, people typically put prices in relation to shares, and not contracts (i.e. $2.17 vs. $217).
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Post by mbeauch on Nov 14, 2012 21:54:12 GMT -8
A decent SA article for a changeIf you're thinking of buying here, I would at least wait until Friday's FC talks in DC are over. Not going anywhere until we get some more clarity. (I think a loud message has been sent the last few days). Wish you all the best, tough to hear the stories. What stands out is the 380 mil OI&E guided for Q1. It makes the guidance number even more pathetic. I am here to tell you, if PO would have guided to $13 EPS we would not be this low.
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Post by bryanyc on Nov 14, 2012 21:55:07 GMT -8
(...)My question for the board, at this point, with peanuts left in my account, is it better to put that 15k into some straight options, maybe an April 600 or should I get a spread like April 640/650. Any other suggestions would be welcome. This whole ordeal is putting a huge mental strain on me and I'm neglecting the family because of it. With the holidays coming up, I don't want to ruin this special time for the kids stressing over the markets. I want to just put on a position and forget it, hopefully after jan earnings, some sanity will come back. I am so, SO sorry to hear of your losses. All MHO: NO on the unhedged options. Down OR endless sideways will bleed them mercilessly. Spreads are stupid cheap here, and if you must, you can always unhedge some portion in a confirmed uptrend...we do not have that now...until proven otherwise, this is still falling-knife mode. That same line of reasoning, I prefer the JAN'14 spreads...if you must, you can always roll those to closer expirations in a confirmed uptrend. Meanwhile, it's far less stressful enduring drawdowns when you know you have 13 months to recover. This is good advice. Note however that you will not recover the original amount with this type of strategy because of the magnitude of the loss, or it will take 3 - 4 years to reach parity. I have been in this type of position 2, maybe 3 times honestly. You have to assume as much or greater risk to recover the full amount or (heaven forbid) even profit. This is hard all around. The time frame that you are invested in is critical. Nothing is certain up until and including Jan earnings. Love my iPad is right that sideways movement can be a killer for options. So the question is April, or further out. It might be useful to run the numbers on what your returns for various positions at a couple of points in the next year or so would be: April, July, Jan 14. Obviously no one has a concrete answer. But I will say that on balance I might favor a longer term bet at a higher price than a shorter term middle range price if you want to fully recover because, IMHO there will be a recovery in the next 1/2 year to 700 or better *YMMV*. Recouping 50 - 75% is another game. About your stress with the family (and yourself) I fully sympathize. That is an unfortunate price that is extracted from us and perhaps no one really "appreciates" this stress that we have to endure. Cheers to the Longs!
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JDSoCal
Member
Aspiring oligarch
Posts: 4,182
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Post by JDSoCal on Nov 14, 2012 22:13:47 GMT -8
Pain range 540-544.99:
Stk Puts Calls 525 946 9,690 530 1,983 10,147 535 3,421 9,305 540 7,235 11,051 545 11,482 9,964 550 15,789 11,754 555 11,697 5,961 560 16,601 7,010
Let's hope those puts hold and help us rally into Fri.
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Post by bryanyc on Nov 14, 2012 22:19:52 GMT -8
Pain range 540-544.99: Stk Puts Calls 525 946 9,690 530 1,983 10,147 535 3,421 9,305 540 7,235 11,051 545 11,482 9,964 550 15,789 11,754 555 11,697 5,961 560 16,601 7,010 Let's hope those puts hold and help us rally into Fri. A rally to 540 : I'm for that. Oye!
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Post by mbeauch on Nov 14, 2012 22:21:02 GMT -8
Wouldn't it be nice to see some of those puts go worthless?
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Post by tradermac on Nov 14, 2012 22:23:17 GMT -8
I am so, SO sorry to hear of your losses. All MHO: NO on the unhedged options. Down OR endless sideways will bleed them mercilessly. Spreads are stupid cheap here, and if you must, you can always unhedge some portion in a confirmed uptrend...we do not have that now...until proven otherwise, this is still falling-knife mode. That same line of reasoning, I prefer the JAN'14 spreads...if you must, you can always roll those to closer expirations in a confirmed uptrend. Meanwhile, it's far less stressful enduring drawdowns when you know you have 13 months to recover. This is good advice. Note however that you will not recover the original amount with this type of strategy because of the magnitude of the loss, or it will take 3 - 4 years to reach parity. I have been in this type of position 2, maybe 3 times honestly. You have to assume as much or greater risk to recover the full amount or (heaven forbid) even profit. This is hard all around. The time frame that you are invested in is critical. Nothing is certain up until and including Jan earnings. Love my iPad is right that sideways movement can be a killer for options. So the question is April, or further out. It might be useful to run the numbers on what your returns for various positions at a couple of points in the next year or so would be: April, July, Jan 14. Obviously no one has a concrete answer. But I will say that on balance I might favor a longer term bet at a higher price than a shorter term middle range price if you want to fully recover because, IMHO there will be a recovery in the next 1/2 year to 700 or better *YMMV*. Recouping 50 - 75% is another game. About your stress with the family (and yourself) I fully sympathize. That is an unfortunate price that is extracted from us and perhaps no one really "appreciates" this stress that we have to endure. Cheers to the Longs! +1000
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Post by kloot on Nov 14, 2012 22:47:55 GMT -8
I'm starting to get worried about my April 13 590-600 BCS. I think I opened the position up too soon when AAPL was at 590. Options can be a scary place when you're in a bear market. I think I am worried just because it was my first options trade. I have APR'13 680/700, 685/705, 690/700 (different accounts). They are decimated, and I'm not at all worried. Because I know even in a bear market, we'll have at the very least a sucker's rally / upwave to 650. If you're still apprehensive then, that's the place to lighten up. lovey, been waiting for that 650+ rally for quite awhile now. when is your wag for finally seeing it happen?
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Post by rosie on Nov 14, 2012 22:48:42 GMT -8
More FUD, this time...a delayed release for the new iMac's. All very tiresome. I just talked to apple customer service about a missing return. After getting that sorted out I asked about the iMac delay rumors. I was told that the staff had just finished training for holiday sales and were told the new iMacs would be available in Nov (the 21.5 ") and the 27" in time for Christmas delivery.
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Post by kloot on Nov 14, 2012 23:02:45 GMT -8
Irrelevant? If Apple sells 10M iPad minis at an ASP of $350, and a margin of 30%, that means that out of ~56B in sales, 3.5B of that has only a 30% margin. If Apple sells 10M Minis, 80-90% of which are not cannibalizing anything, that's 8-9M products sold that would not have existed otherwise - or gone to another company - for the price of 1-2M slightly lowered margins. I'll take that any and all quarters. To paraphrase The Hustler, "30% of something big is better than 100% of nothing." Well, by that argument, the iPad 2 lowers margins. I happen to believe that Apple is losing sales, not cannibalizing sales at lower price points. Older CPU's and screens get cheaper to make every quarter. No F'n way the Mini has a 30% GM. I hate to cite the teardowns, but come on. Apple can make a lower res pad without cellphone radios and an older CPU with decent margins for crissakes. +both thumbs
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Post by lovemyipad on Nov 14, 2012 23:19:10 GMT -8
I have APR'13 680/700, 685/705, 690/700 (different accounts). They are decimated, and I'm not at all worried. Because I know even in a bear market, we'll have at the very least a sucker's rally / upwave to 650. If you're still apprehensive then, that's the place to lighten up. lovey, been waiting for that 650+ rally for quite awhile now. when is your wag for finally seeing it happen? WAGs: 1) After NOV'12 OE 2) Monday after Black Friday 3) First week of December
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Post by amade1974 on Nov 14, 2012 23:58:49 GMT -8
max pain is most accurate right before expiration. much can happen between now and jan expiration to shift the max pain target
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Post by macziggy on Nov 15, 2012 0:29:43 GMT -8
I wandered over to Nick's site today, no pretty. Someone who has been talking to him in the past, it might be a good idea to talk to him now. Just sayin. He is talking about being unloved, that is a bad sign. I don't know the guy so it is not my place, but he needs a friend it sounds like. Nick seems kind of like a sixties guy trying not to get too upset about the state of Apple right now. Just chilling and knowing that things will work out eventually. That's a good place to be. Because, there's not much any of us can do about that, except push our imploded option spreads further out. I liked reading Nick tonight. He made me calmer. There is just nothing we can do. There are forces that are greater than we are that control this stock. As hard as it is, we must just stay steady and wait until this all passes. And, it will. Apple's products are the best and the company will make tons of money in the future. This is just "business" to the Doug Kasses of the world. Not to be confused with real greatness, which is Apple the company. Nick isn't letting fear get to him. I like that.
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Post by macziggy on Nov 15, 2012 0:35:22 GMT -8
This is from Tony Caldaro's blog (http://caldero.wordpress.com/) in the comments section:
"A Technical Analyst and a Fundamental Analyst are chatting about the markets in the kitchen. Accidentally one of them knocks a kitchen knife off the table landing right in the fundamental analyst’s foot! The fundamental analyst yells at the technician, asking him why he didn’t catch the knife? “You know Technicians don’t catch falling knives!” , the technician responded. He in turn asks the fundamental analyst why he didn’t move his foot out of the way? The Fundamental analyst responds, “ I didn’t think it could go that low”."
HaHa!!
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Post by wheeles on Nov 15, 2012 3:22:43 GMT -8
And FB was UP. How screwed up is the market? FUBAR. Probably someone with a long AAPL, short FB pair trade got a margin call.
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Post by wheeles on Nov 15, 2012 3:27:17 GMT -8
I wandered over to Nick's site today, no pretty. Someone who has been talking to him in the past, it might be a good idea to talk to him now. Just sayin. He is talking about being unloved, that is a bad sign. I don't know the guy so it is not my place, but he needs a friend it sounds like. I think he is doing the self reflection thing and advocating patience for all of us. While we sweat it out here I believe he is in Thailand at a resort with his wife for a several weeks long vacation with daily swimming, massages and occasional looks at the market. Not to worry. His problem is that his sense of self-worth is too closely tied to AAPL.
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Post by phoebear611 on Nov 15, 2012 3:33:54 GMT -8
And FB was UP. How screwed up is the market? FUBAR. Probably someone with a long AAPL, short FB pair trade got a margin call. I believe that short interest was pretty big going into this event in FB yesterday (all those shares being released to holders to be sold if they wished) -- and when the stock didn't plummet a short squeeze ensued...margin calls....well we've seen this movie before.
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