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This is the second in a series of posts about Tony Parker's option trades based on his prediction that the market has bottomed. His previous trade on QQQQ (Nasdaq Index) calls was quite profitable in a short period of time, but with volatility falling the return to risk ratio from buying options on indexes is not as attractive. Hence, Tony has decided to play specific stocks that tend to be volatile; on which options are most effective. Apple (APPL) was a prime candidate. Readers of the site will know that I already own Apple Stock, bought at a much higher price, so I will be watching this trade with interest while I wait for a rally in the stock. Here is Tony's rationale behind the purchase of Apple call options and potential outcomes based on discussions I had with him after the trade.
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