Thursday, November 16th, 2017

AAPL a trade that made us money

I have been so busy with this earnings seasons, have not spent much time writing. Making our money the old fashioned was- trading. Trading has been intense and sometimes downright brutal. Earnings season is  gift from heaven and the exploitation of trades and opportunities that it provides.  Many traders just make a whole bunch of coin during this time and that is exactly what I have been focused on it. So here is one trade that we did that made us serious coin, you probably know what  it is, but let me just given you some low down on it and how we pulled it off.

AAPL was supposed to deliver earnings on July 21 , 2009. Here is the trade I posted in members area.

APPL EARNINGS IRON CONDOR 7/21/09 11.45 PM

SELL AUGUST 170 CALL

BUY AUGUST 180 CALLS

SELL AUGUST 135 PUTS

BUY AUGUST 125 PUTS  Net credit = 1.70 Max risk= 8.30

This is purely an earnings speculative trade and I will exit it in next few days. AAPL is at 150 and make closer higher or lower. The trade can be held longer term if AAPL has not moved much from its price. Please click on the graph below to be posted.

This is a trade that is essentially delta neutral, meaning we didn’t care which way the stock moves, up or down we were in it to make money in a non- directional way. So we were long and short on AAPL at the same time-having a bull put spread and a bull call spread.  These strikes were well chosen based on technical analysis and prior history of earning behavior and how much AAPL can move in our given earnings dates. There was lot of work involved in the set up.

Well after market closed AAPL delivered stellar earnings- and the stock started bouncing up and down but withing our estimates and known probabilities. Next morning I watched the Volatility in AAPL come down hard. I had a grin on my face as the options just collapsed around our short strikes and the extrinsic values just got sucked out of them. There was a 10%-20% drop in volatility. At about lunch time here is what I ordered.

AAPL Earnings Trade closed 7/22/09 11.00 PST

BUYBACK AUGSUT 170 CALLS

SELL AUGUST 180 CALLS

BUYBACK AUGUST 135 PUTS

SELL AUGUST 125 PUTS     Net debit = 0.95

Profits 0.75 cents

We were out and about with 0.75 cents profit in less than 24 hrs. Well if you traded 10 contracts which is what I usually do, you would have made $750 profit in less than one day. The trade is still valid and one can argue that we should have stayed longer and made more money earning theta every day to the tune of $1700 max profits till expiration. Well that is true and some people are doing it, I didn’t, and closed it. One can always re-enter these trades if the premises are still valid.

These are the trades that members do get in our premium membership. Every earnings season is a gift from somewhere and hope they keep this tradition up every 3 months.

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  1. […] up to 170 as of yesterday. That is a 90 point gain in just under 6 months. Those of you who played AAPL earnings and held AAPL throughout its upward trajectory into the right hand side of the chart must be […]

  2. […] AAPL A Trade That Made Us Money […]

  3. […] AAPL A Trade That Manufactured Us Revenue […]



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