Good day to you all. The reason this article is being published today instead of Sunday is because of today´s (Monday) Apple (NASDAQ:AAPL) monster +16 point rally.
At the time of writing, I recommend selling iron condors again.
The call spreads we are selling are above two very important technical and psychological resistance areas. These are the 50 day moving average, which now sits at $594.27, and the psychologically-important $600 price.
The call spreads that we are selling now in our $1,000 options part of the portfolio, which now sits at around $1,250 after two profitable weeks, are placed as follows:
- Sell to open 3 $610 Apple weekly 610 calls @1.85
- Buy to open 3 $615 Apple weekly 615 calls @1.25
This is done for a credit of $0.60 each, which would give us $180 in credit if these options expire worthless.
"The other sides of the iron condor we are going to sell are where Apple has good technical support. So the put side should look like this:
- Buy to open 3 Apple weekly 555 puts @1.05
- Sell to open 3 Apple weekly 560 puts @0.65
This is done for a credit of $0.40 each.
Summing up the credit from both sides, we should get around $1 for each iron condor sold.
This means we will get $300 in credit if Apple closes this week above $560 and below $610, which should be good enough unless Apple rallies past the two said resistance points or if it falls below its $582 and $562 support zones, which I don´t think will happen this week.
Currently, Apple´s technical outlook is as follows:
If there are any modifications to this trade, such as "rolling" either the call spreads or the put spreads, I will publish it as soon as possible in my Stocktalks.
This week´s trade gives Apple $22 of movement to the upside and $28 room of movement to the downside.
The fact that Apple is up while the market is down, if Apple is still the leader, means we might see the Standard & Poor´s 500 index (NYSEARCA:SPY) moving higher. But the fact that the 20 year Barclays bonds (NYSEARCA:TLT) are also up makes me doubt about the strength of the rally right now. That´s why, even with Apple´s move to the upside of more than 2%, I see a lot of fighting between the bear and bull side until the dust settles and we will benefit as long as the stock does not move much more dramatically to either side.
If there are any questions regarding this week´s trade, use the comment section below.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.