Tuesday, April 19, 2016

AAPL 2016 Update #84 (Stock Purchase)

Tuesday morning and AAPL is still showing weakness with the stock trading down to about the 107 level. There has been quite a bit of selling just since Friday and earning is 7 days away.

With this further drop in the stock price and what appears to be continuing weakness, I am gong to roll the short calls down again 1pt and purchase more stock.

Here are the trades:

Part 1 - Roll down the short call
+7c May W1 108 Call @ 2.75
-7c May W1 107 Call @ 3.23
Net debit: -0.48/c

Part 2 - Purchase stock
+3 shrs AAPL @ 107.209

Total inventory of shares in the position is 799 (just one short of being able to trade 8 option contracts again)

As of this morning, here the is resulting position P/L graph.  The aggressive rolling down of the calls have recovered about half (1.5pts of the 3 pt move) of the stock price move.

Fig 1 - Coverall Call Position

The maxmium profit of the position is down from +8K to about +6.7K and the breakeven is getting lower to about 98.

There is about 17 days to expiration, so even if the stock remains at this price, the position will about +2K in theta.

If the stock moves again, I will look to see what adjustments can be made.

I will be posting a separate entry defining an upper and lower range for the stock price that I see for the next while.

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