Following my plan yesterday, I've sold Google and Apple calls to take advantage of an over-bought situation.
Google:
I sold GOOG DEC 2009 calls at a strike of 590 and a premium of $2.50/share. The trade plan is to close out this position at or under $0.50/share at a profit, or close the position at $5/share at a loss if the trade goes against me. I would rather not hold this until expiry as it is over 4 months away.
Apple:
I sold AAPL OCT 2009 calls at a strike of 200 and a premium of $0.40/share. I will place a bracket order to either close the position at $0.05/share or stop-loss at $0.80/share. AAPL has been rising very fast and its almost at its all-time high of $200. Technically speaking I don't think that we should be approaching the all-time high level so early out of the recession. AAPL still depends on consumer spending and with unemployment rates in the US pushing 10% this upshoot maybe premature. So I chose to sell the calls at the strike of 200.
It is very important to place stop-losses for both trades as we are still in an up-market, making this a contrarian trade against the market. Furthermore, I will look to buy these back before their earnings releases as the stock can become very volatile.
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