Wednesday, August 12, 2015

AAPL - Update #22 (Stock Purchase)

Aug 12

Analysis

AAPL dropped hitting a low of 109.63 before reversing to close strongly on the day. The drop was low enough to sell the hedge in the morning and collect another 4 shares of stock, bringing the total to 693 shares.

The size of the move and reversal indicates that this could be near the bottom of this recent move downward which started just after the earnings release a few weeks ago. The stock has moved over 22 dollars from the high to the low.

I re-hedged the position before the run up at the end of the day. The short call strike will need to be rolled if the move continues higher. I have kept the weekly expiration cycle, so hopefully I don't have to roll up too far and out and AAPL continues to build a base around the 115 level.

Trades

Close Hedge -6c Aug 14' 108 Put @ 0.90
+6c Aug 14' 119 Call @ 0.05

Stock purchase
+4 shrs AAPL @ 110.91

New Hedge
-6c Aug 21' 115 Call @ 1.27
+6c Aug 21' 105 Put @ 1.23


The downside breakeven on this position is now 112.70 and my overall cost basis has dropped slightly to 78 102. I had started this hedge when AAPL was 130.16 back in February. The position is slightly up money as of today and if the stock closes around this same price next week at expiration, the overall position will be up net 1600+, despite the price being 15pts lower from when this hedge was started.

I have 693 shares @ 115.24 (today's close) representing 79 861.

The 93 shares and transaction costs have been paid for by the movement of AAPL stock in the market. No additional funds have been added to the account.




No comments :