Well that was a fast one... Capturing over a $4 move to the downside in a couple of hours was great, but it wouldn't have been so fast if it wasn't for general market weakness helping it along.
Even though I think that there is more potential downside here I realize that some news heavy days are ahead for AAPL. The release of the iPad on April 3rd and the anticipation and hype may drive up the prices again. And I don't want to be caught on a short position, if they announce stellar sales results pre-market and the stock skyrockets before opening bell.
So I have closed out the position at $220.89 today, for a total of $4.12 / share.
Showing posts with label AAPL. Show all posts
Showing posts with label AAPL. Show all posts
Monday, March 15, 2010
March 15 - AAPL Trade
Quick update here.... My Apple trade was taken this morning and a short position was initiated at $225.01 / share....
March 12 - AAPL Trade Watch
Hi Everyone.... here we go again with a local price bubble....
Many of you who have been reading my comments regularly know that I've been watching Google and Apple for a contrarian counter-trend trade as my thought was that they were over-bought. Over the past month, I pulled the trigger on Google by selling calls on Jan 7th. Soon after Google had a correction and is now in the stable stage. AAPL however, seems to be making new highs everyday.
I see a panic-buying pattern emerging here which as a contrarian short-term trader I want to play against. Below is the daily plot of AAPL with my trendlines:
The indications for local bubble are all here. AAPL is making new highs fast on lower volume, the 14 day RSI indicator is in over-bought position, and the MACD has started to tick down. Furthermore, for the past couple of days we've had small candle sticks at the top trading at a tight range.
I will look to short the stock or buy puts. Shorting will give me better mobility in and out of the stock should it turn against me. The reason I will short the stock or buy puts versus selling calls is because the potential for profits for selling calls is limited to the premium while the upside is virtually unknown; if the stock skyrockets, I'm on the hook as far up as it goes, similar to shorting the stock... so why not just short it and maximize potential profits.
Many of you who have been reading my comments regularly know that I've been watching Google and Apple for a contrarian counter-trend trade as my thought was that they were over-bought. Over the past month, I pulled the trigger on Google by selling calls on Jan 7th. Soon after Google had a correction and is now in the stable stage. AAPL however, seems to be making new highs everyday.
I see a panic-buying pattern emerging here which as a contrarian short-term trader I want to play against. Below is the daily plot of AAPL with my trendlines:
The indications for local bubble are all here. AAPL is making new highs fast on lower volume, the 14 day RSI indicator is in over-bought position, and the MACD has started to tick down. Furthermore, for the past couple of days we've had small candle sticks at the top trading at a tight range.
I will look to short the stock or buy puts. Shorting will give me better mobility in and out of the stock should it turn against me. The reason I will short the stock or buy puts versus selling calls is because the potential for profits for selling calls is limited to the premium while the upside is virtually unknown; if the stock skyrockets, I'm on the hook as far up as it goes, similar to shorting the stock... so why not just short it and maximize potential profits.
Wednesday, December 16, 2009
December 16 - GOOG and AAPL
Google:
I am still watching Google for signs of weakness as it has run up very quickly in the past couple of weeks and is now trading in a narrow range, where the bulls are being kept at bay at around $600. I will be looking at selling March 700 CALLS which are today trading around $4.20/share. I will look to slowly initiate a short position as signs of a downturn begin to show.
Apple:
This stock's explosive rally has come to a halt and it is now trading tightly around the $195 - $210 range. I'm bearish on this stock and looking to initiate a short position. I think the calls are trading cheap so instead of selling calls I am considering shorting the stock and buying Jan 205 or 210 calls as a hedge incase we start 2010 with a rally.
I am still watching Google for signs of weakness as it has run up very quickly in the past couple of weeks and is now trading in a narrow range, where the bulls are being kept at bay at around $600. I will be looking at selling March 700 CALLS which are today trading around $4.20/share. I will look to slowly initiate a short position as signs of a downturn begin to show.
Apple:
This stock's explosive rally has come to a halt and it is now trading tightly around the $195 - $210 range. I'm bearish on this stock and looking to initiate a short position. I think the calls are trading cheap so instead of selling calls I am considering shorting the stock and buying Jan 205 or 210 calls as a hedge incase we start 2010 with a rally.
Friday, December 4, 2009
December 4 - AAPL Short
Following my last posted article on Google, another one of my favourite trades is currently AAPL. The current setup is a perfect resistance and trend break scenario.
The recent trend upwards has now come to a halt as the stock found a local ceiling around the 210 price point. This is not surprising as I think AAPL's price has risen too far and too fast - not to mention surpassing its pre-recession highs.
Below is a daily price plot of AAPL with my drawn trend lines:
As AAPL breaks the uptrend and starts to move down, I would look to straight out short this stock. Unfortunately I will not take a short position today as I will be on vacation next week and unable to monitor it. So I will be selling out-of-the-money calls for Jan 2010.
The recent trend upwards has now come to a halt as the stock found a local ceiling around the 210 price point. This is not surprising as I think AAPL's price has risen too far and too fast - not to mention surpassing its pre-recession highs.
Below is a daily price plot of AAPL with my drawn trend lines:
As AAPL breaks the uptrend and starts to move down, I would look to straight out short this stock. Unfortunately I will not take a short position today as I will be on vacation next week and unable to monitor it. So I will be selling out-of-the-money calls for Jan 2010.
Wednesday, October 14, 2009
October 14 - AAPL and GOOG post trade
Today I bought back the OCT 200 AAPL calls at $0.05/share making the trade a success. I still think AAPL is over-bought, but will not short again until there is confirmation of a downturn. In the meanwhile, it seems too strong.
As for GOOG, apparently people think its a good buy at these ranges and continue to pump up the price. Even though I think they too are over-bought at these levels, I closed out the trade at a loss. I bought the DEC 590 calls back for $5.60/share. I would love to see them disappoint tomorrow, but for now I had to reduce my exposure to make sure I don't get caught offside incase they top expectations and the market gets itself into a buying frenzy.
As for GOOG, apparently people think its a good buy at these ranges and continue to pump up the price. Even though I think they too are over-bought at these levels, I closed out the trade at a loss. I bought the DEC 590 calls back for $5.60/share. I would love to see them disappoint tomorrow, but for now I had to reduce my exposure to make sure I don't get caught offside incase they top expectations and the market gets itself into a buying frenzy.
Thursday, October 8, 2009
October 8 - AAPL and GOOG updates
I feel that an update on the AAPL and GOOG positions are in order given the recent movements in the market and that we're approaching their earnings dates.
AAPL:
This trade was initiated on August 27th when OCT 200 AAPL calls were sold for $0.80/share. Although the underlying stock has moved higher since the selling date, the calls are trading just below the $0.80 mark as time value has decayed and lowered the premium. Normally I would not hold this call when the stock is soaring and we are days away from earnings. However, these calls will expire on Friday October 16th, while the earnings is reported on Monday October 19th. This way I am avoiding the volatility that can result from the earnings after the announcement. I don't see AAPL trading above $200/share until next Friday but I will watch it closely just incase I need to close it out before expiry.
GOOG:
This trade was initiated on August 27th when DEC 590 calls were sold for an average of $2.50/share. This stock was fine until the past 2 days where it has climbed from nearly $490 to around $520.
The trade plan calls for a stop-loss limit of $5, which is why I am thinking about closing out this trade, especially as the earnings call is scheduled for next Thursday October 15th. A good report can send this stock soaring. I do not want to take that risk, especially as these calls are long dated - all the way to December 18th. I will look to the next trading days to see if I will close it out or hold on to it.
AAPL:
This trade was initiated on August 27th when OCT 200 AAPL calls were sold for $0.80/share. Although the underlying stock has moved higher since the selling date, the calls are trading just below the $0.80 mark as time value has decayed and lowered the premium. Normally I would not hold this call when the stock is soaring and we are days away from earnings. However, these calls will expire on Friday October 16th, while the earnings is reported on Monday October 19th. This way I am avoiding the volatility that can result from the earnings after the announcement. I don't see AAPL trading above $200/share until next Friday but I will watch it closely just incase I need to close it out before expiry.
GOOG:
This trade was initiated on August 27th when DEC 590 calls were sold for an average of $2.50/share. This stock was fine until the past 2 days where it has climbed from nearly $490 to around $520.
The trade plan calls for a stop-loss limit of $5, which is why I am thinking about closing out this trade, especially as the earnings call is scheduled for next Thursday October 15th. A good report can send this stock soaring. I do not want to take that risk, especially as these calls are long dated - all the way to December 18th. I will look to the next trading days to see if I will close it out or hold on to it.
Friday, September 11, 2009
September 11 - Update on GOOG and AAPL trades
Since the initiation of both short positions, the stocks experienced a pull back and continued towards their previous high. However, the Call options that were sold on August 27th have lost more value and indicate a profit.
GOOG DEC 590 calls currently trade at $1.35/share and the AAPL OCT 200 calls trade at $0.40/share. They have both essentially halved in value since as the both stocks have lost quite a bit of steam to the upside.
I am on trade and do not want to keep these positions around earnings as volatility could introduce large moves. Depending on what happens between now and late October when they report, I will look to close out these positions. Right now I have them on close watch.
GOOG DEC 590 calls currently trade at $1.35/share and the AAPL OCT 200 calls trade at $0.40/share. They have both essentially halved in value since as the both stocks have lost quite a bit of steam to the upside.
I am on trade and do not want to keep these positions around earnings as volatility could introduce large moves. Depending on what happens between now and late October when they report, I will look to close out these positions. Right now I have them on close watch.
Thursday, August 27, 2009
August 27 - GOOG and AAPL Short Position
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.
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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