Sunday, October 3, 2010

AAPL Options: Time is forcing my hand.

Where have I been?
Last week, I continued with my AAPL trades. Problem is, I am on the wrong side of them. Currently I control 35 Oct 16 290 AAPL calls at roughly 5.90 an option. I am clearly going to take a bath- the question is ‘how much’? The stock has become irrational. The charts have become bearish. Yet the story and the fundamentals remain intact. AAPL is trading at cash adjusted 14x future earnings… The Forward PEG ratio is >1. The expansion into foreign markets is ahead of schedule. My guess is Big Money is just profit taking, shaking out the trees, and setting up for another huge profit after earnings (Oct 18th).
Problem is, time is not on my side. The market can remain irrational longer than I can remain solvent. The chart is getting uglier and uglier…
With theta eating my aaples, I figure this trade has 3-4 more days MAX. On any signs of weakness, I am out. On any spike I am unloading half the position. This one did not go my way, so I am going to take my medicine and move on. I just hope it doesn’t kill the patient.
Any thoughts on where we are heading in the next week? I would love to hear any rational thoughts.



  1. Perhaps the chart is simply upside down. Try standing on your head.

  2. Perhaps Joe, but the numbers in my brokerage account remain the same no matter how I look a them... I took second in the ol' nutmeg this year.

  3. Good luck , I have 310 calls for Jan 2011. Hope it works out for you this week.

  4. this will go north of 300 after earnings. So, roll your calls into nov to give yourself more time.

  5. sorry to hear that bro. I have the same 290 calls last week and got out right after Tuesday morning, I am going to sit out until sometime next week.

    If I am you, I will see what the first 1/2 hours looks like, if aapl is struggling, I will roll them to nov, it's just much safer at this point. Aapl have to be up big in the next couple of days for you to get out of the trade. If aapl struggle for the next couple of days, even just time decay will move things down just as fast this week. There is a good chance you will get your money back if you roll to Nov. For options, it's better to live another day to fight.

    or, since you like to take risk, you can roll most to nov, and buy some weekly 290 just in case so you can cover some lost if aapl move to low 290s.

  6. I tried to post on Sunday but it didn't go through. I suggested you average down again and hang in since Apple went down 5% and hit a trough with an expected rebound which came today -- up 10+. Eager to hear what you did. I'm holding Jan 11/ at 300. So, do expect the Oct 18 release to drive the price up or will there be selling on the news?

  7. Apple went from 5 dollars to 500 in just 12 years now thats a rally to talk about.