Tuesday, February 23, 2016

AAPL 2016 Update #75

AAPL dropped 2.16pts today and closed at 94.71. This is a fairly large drop and caused the short calls on the position to gain in value (decrease in prices).

The price is dropping back toward what I see is a daily demand zone from 94.16-92.59.  I will be watching to see how price reacts in this area. I expect to see a bounce again from here, but if not I will be able to adjust the hedge again to capture some value.

Until that test of price happens, I remain in a wait and see mode.

In the meantime, going on the assumption that I am still bullish on the market, I am going to take the opportunity to roll the short call up again and to gain some some value and extend the trade.

I am short the 93.5 call which is carrying a 64 delta and is in the money -- not the best position if you are overall bullish. With today's price drop I can roll the short call up and out in time (just one week) for a net debit of zero and gain another 0.50 in value.

Part 1 - Roll up call
+8c Mar 24' 93.5 Call @ 3.74
-8c Apr 1' 94 Call @ 3.74
Net debit: 0.00/c

This gains 0.50 of value (which is 0.50 X 800 shares = $400) by expiration (38 days away).

The hedge as of today's price is about 54% which is right in the zone for a stock that appears to just be trading sideways and until a break to the downside or upside happens.  94.16 is the next price level to watch and see reaction.

I also have $1781 in cash that yet needs to be deployed to purchase stock.

No comments :