Thursday, August 13, 2015

AAPL Update #23

Aug 13

Analysis

AAPL I believe has now printed an intermediate pivot low from a couple of days ago. The low of 109.63 was marked by a large price reversal to the upside on the daily chart. It also appears to be a retest and bounce of a prior daily demand zone.  New daily supply for AAPL appears to be at the 119 and 121 area.

I believe that AAPL will be trading sideways to up for the next few weeks, but will not retest this lower price -- PREDICTION -- I could be right or wrong. That is the purpose of the hedge.

The short call sold at 115 is now trading ATM. To allow capture of more upside, I have elected to roll out the call another couple of weeks and two strikes higher to 117.

This represents 1200 more in profit potential should the stock just absolutely run away to the upside.

I still have a long put at 105, now very far OTM and expiring next week and a short call at 117 expiring on Sep 04 (week 1).

I will look at dealing with the Aug 21' 105 put in the next few days. AAPL paid a dividend so that has added to the cash balance in the account.

Because I am placing the hedges for little or no cost so far, I will need to pay for some put protection in the coming weeks if the stock continues to advance in order to lock in gains.

Trade

+6c Aug 21' 115 Call @ 2.47
-6c Sep 4' 117 Call @ 2.53
Net credit of +0.05/c


If the stock were carried away at the 117 strike, the value of the position of would be 600 * 117 + 93 * 117+ = 81 081+

This is compared to my opening position of 78252 at a starting price of 130.16. The stock can be 13pts lower compared to the Feb 26 opening price and I would still make about 3K in profit.

-End

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