Tuesday, June 09, 2015

AAPL Update #9 (Stock Purchase)

Jun 9

Analysis

AAPL dropped on the opening this morning going below 126. This was a good move down and enough for the hedges to gain enough value that they could be closed and more stock purchased.

Implied Volatility Rank (IVR) for AAPL is in the 17th percentile, up from its low of 4 a couple of weeks ago.

Trades

Sold Jun 19' 126 Put @ 2.00
Buy Jun 19' 129 Call @ 0.69

Based on the opening prices of the hedges, this is a net profit of 2.31/c

Total dollar value from the hedges (6c): 1386

I am using this full amount to immediately purchase stock @ 125.80. I can purchase an additional 11 shares. The portfolio of AAPL shares now total 654.

New hedges

I selected new hedges based on the EM (expected move) for Jun 26. The EM at current volatility is calculated to be around 122-130. I will hedge inside this EM, hoping for volatility to continue to expand and the price decline further.

-6c Jun 26' 128 Call @ 1.58
+6c Jun 26' 124 Put @ 1.56
For a net credit of 0.02/c

I am keeping the hedges tight as I expect further declines in the market. With the stock trading this morning around 126 at the time of hedges, I have a 2 dollar upside move from current price (about 1200 further gain) or a 2 dollar downside move (a 1200 loss) by expiration.

The stock position is hedged at current price with a with a -73 delta.

Position Value - End of Day

+654 AAPL @ 127.40 = 83319
- 6c Jun 26' 128 Call @ 2.02 = -1212
+6c Jun 26' 124 Call @ 0.95 = 570

Total = 83319 - 1212 + 570 = 82 677

Recall that the original opening value was 78 252. The stock price is still lower than on Feb 26, yet the position is now up over $4400

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