Tuesday, September 13, 2016

AAPL-2 Hedged Trade #8

Sep 13

AAPL is one of the the stocks up in otherwise down market. AAPL is currently moving up in the 108 pt range.

This is a significant move off last Friday's lows of 102. Significant buyers are creating demand for shares.

I am going to move the short call strike up and out in time to build a little more profit buffer.


+7c Oct 7 104 Call @ 5.27
-7c Oct 28 106 Call @ 5.27
Net debit: 0.00/c

Total Commissions: $10.34

This is adding a few more weeks in time (45 DTE) but improves the profit potential to +$3K anywhere above 106pts.

The risk graph now looks as follows:

Some things to note:

- Share count 710
- Profit on the bulk of the shares purchased at 105.04 is $1939
- Potential profit in 45 days due to hedging and shares: +$3K
- If the stock were to return to 105.04, the position profit would still be +$2K. The buy and hold sotck only position would be $0
- Option theta decay is +$29/day (position gaining value, all other variables equal)

When I look at the price chart, there is still significant supply in the $110-$112 region on the daily and weekly. Price can possibly test this area but more buying will be needed to move past this level.

The next catalyst will be earning release sometime in the Oct. Typically the fall is an overall bullish time for AAPL and tech in general.

The position is now quite well hedged with -58 delta for every 100 delta in long stock and the max profit range is anything above 106 pts for the next 45 days.

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