Sunday, March 24, 2013

AAPL Stock

Chart Multi-Month Downtrend in AAPL:


As anyone knows that has been trading AAPL for any length of time, it has been in a strong and decisive down trend for months (since September 2012). I know many, myself included are wondering when the move lower will be over. So I have decided to take a closer look at how AAPL stock has been performing technically.

In the above chart I have drawn in support at $419 and resistance at $485. Once you draw these support and resistance lines, AAPL seems to be trying to digest the cliff dive it took from $705 back on 9/21/12. Because of the hear mentality my guess is a lot of people got hurt playing APPL and will be licking their wounds for sometime. With that said I do think AAPL has bottomed, but I also think it will trade sideways in this new consolidation channel for sometime to come.

Option Trade Ideas:

As you can see on the chart, AAPL stock is trading in the middle of its new trading range with implied volatility around 33%. I think implied volatility is a high enough level given the chart pattern of AAPL to consider selling an iron condor. Here is the one I am looking at specifically in the month of May:

AAPL Stock Iron Condor
Analysis of AAPL Iron Condor Using Mini Options
The above screen shot is displaying a May iron condor selling the $475/$485 callspread and the $430/$420 putspread. As you can see I am looking at the mini options that just became tradable on the 18th of March. A mini option is 1/10 the size of a regular option. So in this case it represents only 10 shares. 

You can collect around $6.12 for this $10-wide iron condor. It has 54 days left until expiration with a 55% probability of success. I think the probability is a bit higher looking at the technicals. for every 1-lot you put on you are looking at a max gain of $62 on $38 of risk.

Profit Range: $423.84 - $481.15
Last Close:   $461.91
Max Loss: $38
Max Gain: $62 (almost 2x)

Good Luck Trading!

In The Money Trades

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