Friday, February 12, 2016

AAPL 2016 Update #73

The markets rallied strongly today - expiration Friday -- capping a week of lots of selling. Chinese markets were closed all week and the coming Monday, the US market is closed.

The VIX rose this week indicating that fear came back into the market.

That said, AAPL gave up some of its gains earlier this week and while it has not tested into the demand zone below 92, it is attempting to poke its way down into there. Price action has been very inconsistent all week.

Because of the sudden drop in the last few days, the short call from 94.5 has made money (decreased in value). The price action is also failing to follow through -- meaning AAPL looks to be trading sideways at best, but there is a possibility that with more selling the floor of 92 area will be broken.

The 92 area of demand is beginning to look weaker with the repeated close tests of price.  I am going to roll the short call hedge to capture this cash and be a little more aggressive (lower price, higher delta) and reduce cost basis.

Trade
Part 1 - Roll down the short call
+8c Mar 11' 94.5 Call @ 2.72
-8c Mar 11' 92.5 Call @ 3.77
Net Credit: 1.05/c

This gives 8 X 1.05 = 8.40 pts ($840 in additional credit)

** Add this to the previous collected credit of $1074 to make $1914 of cash to purchase stock.

Part 2 - Stock Purchase
(In progress)


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