TLT Long Put Spread

iPhone slump, schmi-Phone slump. When its customers are buying up a growing line of subscription services, AAPL’s success is less and less tied to its iPhone. And that success was manifested as a rally the equivalent of 2.4 standard devs last night after earnings. A $75 billion share buyback helped, as did a 5% dividend hike. Apparently, AAPL had a premonition of President Trump demanding that the Fed cut the Fed Fund rate by a full percentage point in this week’s FOMC meeting. Apple figured that if rates will go lower, why not buy back more shares? Even though AAPL may not be borrowing money for the buyback, it might be betting on rates not continuing to go up, and thus earning less on its cash. TLT even rallied on the news. Now, I know AAPL isn’t in the bond trading business, but maybe the company could be a contra-indicator for rates. If you think the Fed might spite Trump and won’t cut rates, and that TLT might slink back down, the long put vertical that’s short the 123 put and long the 125 put in the June weekly expiration with 37 DTE is a bearish strategy with a 61% prob of making 50% of its max profit before expiry.

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