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:

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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Monday Market Analysis

After hitting another new multi-year high last week the markets were seen taking a bit of a breather as volatility came back into the market. We traded down from a high of 153.28 on the SPY to 149.94. I still believe that this market remains in an uptrend and that dips will likely continued to be bought. The big level I am watching to hold as support is around $147 where the SPY broke out after several attempts and failing.

I used last weeks pullback as an opportunity to take profits on my long volatility play and to close my short callspread on the SPY. All in all it was about a wash between the two positions. I also closed out my long position in PBI. I was the owner on record for the ex-dividend date, so I will be getting the dividend of about $300 sometime in the first few weeks of March.

CLF has had a nasty fall after reporting earnings and cutting the dividend and took a hefty portion of my gains for the year. I was up close to $1,500 for the year, but am only up about $350 as I write this post. But I collected a decent amount of premium to assume this risks and was prepared for it. With the PBI dividend coming in a couple weeks and NLY paying me my next dividend in about a month, I should be back up over $1,000.

Look it is slow and steady that wins this race. Like I have mentioned in a recent post, I have set up my portfolio to withstand 15-20% down-moves and still break-even for the year. This have been accomplished through selling calls against my positions to lower my cost basis and the yield from the dividend. Now CLF cut its dividend, so my cushion shrunk a bit there. Just one last note, if you want to see what I did to other positions I had or have blogged about recently, go back to their original posts and read the comments. On that same note, it may be worth subscribing to the comments for anyone trade if you wish to follow the evolution of it.

Good Luck Trading!

Positions in: CLF, INTC, JNJ, MSFT, NLY, PFE, and T


And 1 favor that we ask: 

If you like the hard work we put into our blog posts and videos, PLEASE help us out by sharing them. Click the share links below and share them on FB, twitter, etc. It really helps us get more exposure and grow IN THE MONEY TRADES!

The Trend is your Friend...so don't fight it!

The markets continue to move higher. I thought for sure we were finally set for a decent correction of 5-7% after Fridays move lower of more than 1% on the S&P 500. But mine along with all the hopes and dreams of the market bears were crushed after Fridays gains were all but a distant memory as the bulls came in to support the market back near 5 year highs. As tempting as it is to get short, I am fighting the urge and sticking to what has been working...and that is to remain long.

I have a short hedge in place, that is very small compared to my long position. But I also have the downside protection from the calls I have sold agains my positions, as well as the extra cushion I am receiving from the dividend from those positions. All in all I am protected in the tune of a 15-20% down move in 2013 based on the positions I have on. So I feel pretty comfortable with the positions I have on. As I have no expectations of a move so sever this year.

I am conscious every day I check into the markets to leave a sizable amount of my portfolio in cash for future opportunities (currently around 35%). The last thing I want is to be fully invested when the market does decide to correct. Or at the very least to be ready when some decent volatility comes back into the options market, so that I can sell some premium.

I tentatively have plans to get a little more short if we get to all time highs on the SPY of around $157, and not earlier unless the markets significantly change their tune.

So for now I continually remind myself that the trend is your friend....until the END!

Good Luck Trading!