Wednesday, October 13, 2010

AAPL Ratio Spread

fAfter closing out my short 300/310 call spread for a loss and analyzing the trade more, I just felt this stock had a destiny with $300 and IV was historically low so felt like being long made more sense but didn't want to take the risk of being wrong. I didn't want to pay the $6 premium for those calls, so I bought (2)300 calls and sold (4)310 for a net of $1.05. My hope was that it stayed in its uptrend channel and I could get out for a profit before expiration. But I didn't lose anything on the trade until the $320 strike so really wasn't concerned. But of course as soon as I put the trade on the stock tanks almost $20. It was meant to be a lotto ticket type play with a net debit of $210 and average possible payout of $1000 between the 305-315 strikes. So I just hung on and was able to get out for a small profit today of $300. I closed at about $301.50 intra-day. I felt that with only 2.5 days to go the likelihood of pinning near $300 was great and that would be a loss for me so I took what I could get.

Below was the risk analysis just after I closed the trade earlier today. I had to recreate the trade and prices since it was already closed out. The trade has a lot of potential profit it it goes higher the next two days, but could be and was a complete loser as of yesterday, so just felt prudent to take something rather than nothing.

1 comment:

  1. Ouch!! AAPL is in the sweet spot of the ratio spread I closed out on Wednesday for a $300 profit, you could get $1500 right now. I'm in a funk lately, feels like Murphy's Law is in action.