Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Apple Reports First Quarter Results

apple.com

Post reply on HN
Print view View original

71–80 of 105 posts

Re: Apple Reports First Quarter Results

#71

Post by Nrsolis »

mdemare wrote: post #58
encoderer wrote: post #54

Earlier quoted context omitted.

It's like you understand the theory but not the practice of how this works? In reality, you "short" a stock by purchasing a Put option. For example, these are made up numbers, but if you thought Apple would tumble on earnings and wanted to short it, you'd buy, say, $525 put options. This is a contract to sell 100 shares of apple at $525. It's worthless if they trade above $525 but if it drops below, you're in the mon…

Shorting and buying put options are not the same thing.

And that's exactly it. The commenter doesn't understand the wildly different processes or effects of going those two different routes.

For one thing, a put (or call) option doesn't even trade on the same markets (usually), has a lot less liquidity (usually), and depends on the supply of people willing to write contracts against positions they already hold. (non-naked) Options also have the effect of limiting any possible loss to the price paid for the option.

When you short a stock, your loss is potentially UNLIMITED. In practice, your broker will buy the stock for you with whatever cash you have on hand if the price moves against you.

That doesn't happen with options but you also don't get the huge sums of money to play with by borrowing against a stock that you don't own but are positive will dive into the dirt.

edit: explanation.

Re: Apple Reports First Quarter Results

#72

Post by minimax »

Nrsolis wrote: post #65
minimax wrote: post #56

Earlier quoted context omitted.

Yeah but you can't short anything without a margin balance. So for a retail account you need something like $100 in margin balance for every $300 of the short position. You can't open a trading account with zero balance and just start short selling things to raise cash.

Of course not, but it's trivial to create a synthetic short position with an almost zero cash balance. Not EXACTLY zero, but close enough. e.g. short a low beta stock, hedge that position, short the higher beta stock, and hedge that position.

short a low beta stock, hedge that position, short the higher beta stock, and hedge that position.

That just sounds like gibberish TBH...

Re: Apple Reports First Quarter Results

#73

Post by patrickaljord »

benihana wrote: post #64
georgemcbay wrote: post #22

Phones and tablets are very close to the point that desktop/laptops got to a few years back where unless there is some major disruptive technology introduced (eg. batteries with 100%+ efficiency over current ones) on top of them the one you bought this year is pretty much good enough to keep for the next many years, until it breaks somehow. There will still be a market of ultra-fashion-conscious buyers who really nee…

It's funny. Every year, since 2007 I've heard this argument, that the market isn't big enough and every year: record growth and profits. No but seriously. This year is the year that Apple's iPhone success catches up to them. "Apple's iPhone business is finally going to fail this year" is the new " this is the year of the Linux desktop"

No one says Apple products are going to fail this year, relax. Most people on earth still don't have a smartphone and so Apple and Samsung will keep on making record revenues and profits until either a better competitor appears or the market gets saturated. Neither will happen any time soon but it's obvious that no market can keep on growing that way for too long.

As for the "this is the year of the Linux desktop", this is the most annoying straw man meme ever. I have yet to meet anyone who ever claimed so except for a couple of articles on cnet or so a few years ago. Linux market share on the desktop worldwide is at 1% which is pretty significant when you think that macs, with all Apple billions are at 5% only. MS has won the desktop war. On mobile however, linux seems to be doing pretty good and so is ios, simply because the market is still growing and there is place for more than one winner. Isn't that great? :)

Re: Apple Reports First Quarter Results

#74

Post by sirkneeland »

As with Microsoft earnings, we will get two reactions:

1) Some people will say the sheer amount of money they are making shows they are not doomed anytime soon

2) Some people will say that making a ton of money now does not mean they will continue to do so in the future, and could still be doomed (if not to bankruptcy than at least irrelevance) in the future.

Both are right. Both will argue the other is wrong.

Re: Apple Reports First Quarter Results

#75

Post by Nrsolis »

minimax wrote: post #72
Nrsolis wrote: post #65

Earlier quoted context omitted.

Of course not, but it's trivial to create a synthetic short position with an almost zero cash balance. Not EXACTLY zero, but close enough. e.g. short a low beta stock, hedge that position, short the higher beta stock, and hedge that position.

short a low beta stock, hedge that position, short the higher beta stock, and hedge that position. That just sounds like gibberish TBH...

What part didn't make sense? If you're not familiar with "the greeks" as they relate to tradable securities, then why worry about hedging at all?

Just buy and hold.

Re: Apple Reports First Quarter Results

#76

Post by thedrbrian »

georgemcbay wrote: post #51
empthought wrote: post #47

Earlier quoted context omitted.

> could trivially be solved I'm going to guess you're neither a computer hardware nor a battery engineer.

I meant solved by making the battery replaceable, even if as a service of AppleCare or whatever if not the end-consumer. See: Teslas, which have to live by the same rules as everyone else when it comes to battery life issues but whose solution isn't 'throw your car out when it won't hold a charge anymore'.

Don't tesla make you throw 1000kg battery pack away?

Re: Apple Reports First Quarter Results

#77

Post by encoderer »

mdemare wrote: post #58
encoderer wrote: post #54

Earlier quoted context omitted.

It's like you understand the theory but not the practice of how this works? In reality, you "short" a stock by purchasing a Put option. For example, these are made up numbers, but if you thought Apple would tumble on earnings and wanted to short it, you'd buy, say, $525 put options. This is a contract to sell 100 shares of apple at $525. It's worthless if they trade above $525 but if it drops below, you're in the mon…

Shorting and buying put options are not the same thing.

Sorry man, but this is just incorrect.

Taking a short position on a security is a strategy.

Buying Puts is a tactic. Short Selling is also a tactic. Both accomplish the same goal of holding a short position -- making money when the price drops.

If you want to take a short position, you can buy Puts. And to wit, if you're a retail investor wanting a short position, this is most often how you'd do it.

Trading the derivitive here is a smarter play for precicely the reason I mentioned: It limits risk. Liquidity on the options market doesn't matter at all because if the price rises, your Puts are worthless anyway. And if it drops, you don't need to sell the contracts, you can execute them (on margin if necessary) and unwind the position that way.

Re: Apple Reports First Quarter Results

#78

Post by pervycreeper »

jmduke wrote: post #31

The magic paragraph: The Company sold 51 million iPhones, an all-time quarterly record, compared to 47.8 million in the year-ago quarter. Apple also sold 26 million iPads during the quarter, also an all-time quarterly record, compared to 22.9 million in the year-ago quarter. The Company sold 4.8 million Macs, compared to 4.1 million in the year-ago quarter. If I were to play armchair quarterback, I'd say that iPhones…

interesting to note where the inflection point is on that chart.

Re: Apple Reports First Quarter Results

#79

Post by Nrsolis »

baddox wrote: post #60
Perceval wrote: post #44

Earlier quoted context omitted.

I don't have the money to lose if the stock goes up.

And that just means you aren't actually that confident about your prediction, just like the rest of the market.

BOOM.

The price of that uncertainty is what you capture in the options pricing model. aka. "premium"

Two scenarios:

(Short-selling) AAPL: Sell 10 lots (1000 shares) short -> now you OWE someone 1000 shares but have the cash in your account of 1000 shares worth of AAPL stock. The next day, AAPL loses 99% of its value, you buy the shares back at their now 1% value, deliver them to the person you borrowed them from, and keep the rest of the cash in your account. OR, the next day, the shares DOUBLE, and now you owe that person shares that are worth twice as much as you got selling them in the first place. Bad news. Nearly 100% loss on the trade.

(Buying a Put Option) You buy 10 AAPL PUT contracts (100 shares each) "at the money" (strike price equal to the last sale of AAPL) for $XX that expire at some point in the future (lets say one month). Anytime between now and then, if the price of AAPL doubles, your PUT OPTION may most-likely will be worth more than what you paid for it and you can sell it for whatever the market wants to pay for it. If you do nothing, at the end of 30 days, your option is worth exactly ZERO.

The difference in the price movements of the underlying securities in both scenarios is what makes up the premium you pay OVER AND ABOVE what the difference is between what the security trades at and the price you paid for that "option" on the security.

Re: Apple Reports First Quarter Results

#80

Post by lstamour »

swombat wrote: post #61
lstamour wrote: post #35

Earlier quoted context omitted.

I wouldn't. People have caught on that if they wait another 8 months, they'll have two new iPhones to choose from. ;-)

To be contrasted with Android, where they only need to wait a couple of weeks for their brand new phone to be "old". Apple buyers really have a raw deal, getting to enjoy having the latest phone for a whole year.

That's not what I meant. Just as sales of new Mac hardware slow before new devices come out and surge after they do, consumers are becoming more aware of the market with each device they buy. Personally, I went 3G, 3G S, 4, 4S with Nexus 4 and Lumia 920 on the side, and now Nexus 5. I found that the Nexus 4 and Lumia adjusted me to larger screen sizes, and iPhone's doesn't cut it for me right now. I love iOS 7, but I can't carry an iPad mini in my pocket, so until they release in-between sizes (which Asset Catalogs and iOS 7 both will help prepare devs for), I'm avoiding the iPhone until I really think I'll get $600-900 of joy from it. So don't get me wrong, just because I don't use an iPhone doesn't mean I don't want one. I just don't want the specific hardware they offer today, and I suspect I'm not alone.
Post reply on HN