Suz Smith's  Instablog

Suz Smith
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I am an equity/options/futures trader with a strong background in TA. I am passionate about the markets and love to empower other traders using an earning while learning strategy. I work for McElhenny Sheffield Capital Management, a private wealth management firm that specializes in real time,... More
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McElhenny Sheffield Capital Management
  • Trade Idea: Keeping It Simple- A Quick And Easy Options Trade On Apple 6 comments
    Aug 14, 2012 8:35 PM | about stocks: AAPL

    Apple (NASDAQ:AAPL), perhaps one of the best known market darlings has been on a tear for the past few days. They are set to reveal their new product's in September, and if history repeats itself the price will soar to new highs.

    Technically, the price is in a rising channel, and faces resistance at $644. While we are overbought in the short term, I think any correction will be relatively shallow due to the new product line coming out.

    Taking a look at the chart below, I've marked the price resistance with the blue horizontal line, and applied a Fibonacci time study. The rising channel and this time study indicates further price appreciation until around September 24th, 2012.

    (click to enlarge)

    My goal here is to take a fast, low risk trade that would benefit from the product announcement without having to take a directional stance. My requirement is the strike below a relevant major moving average, and offer a decent return.

    For this trade I favor selling to open the September $595/$590 bull put spreads for a net credit of $.80 or better. Larger accounts may want to consider a wider spread, the September $595/$585 or a credit of $1.50 or better. The $595/$590 spread returns 16%, and the $595/$585 spread returns 13% for a 5 week holding.

    This trade is actionable today, but you may choose to put on a partial position now and add too it on any significant weakness in the overall market to try for a higher premium. Please remember to use proper position sizing for prudent risk management.

    Suz

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.

    Additional disclosure: Disclaimer: MSCM and/or I may or may not have a position in this stock which may or may not be exited without advance notice. Data is provided for informational and educational purposes only and is not offered as investment advice. Timing of transactions can be critical to the success of a position. MSCM, its employees or owners shall not be liable for any errors or delay in the content, or for any action taken in reliance on any content provided within. Opinions expressed here are the sole opinions of the author and not representative of any firm view.

    Stocks: AAPL
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Comments (6)
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  • Tech Buff
    , contributor
    Comments (101) | Send Message
     
    Hi Suzy

     

    Any ideas for the upcoming Sept product meeting with AAPL... and how to trade options in anticipation of the event? Thx

     

    Seth
    28 Aug 2012, 06:07 PM Reply Like
  • Tech Buff
    , contributor
    Comments (101) | Send Message
     
    Does anyone know if Suz still contributes here?
    29 Aug 2012, 07:21 PM Reply Like
  • Suz Smith
    , contributor
    Comments (28) | Send Message
     
    Author’s reply » Seth, I have exited my entire AAPL directional position - I had the Jan 2013 $600 calls. I hold a decent size position of bull put spreads that start at $600 & below. If we get a decent correction, I would look to reestablish a position, this time using the Jan 2013 $650 calls.
    31 Aug 2012, 09:09 AM Reply Like
  • Tech Buff
    , contributor
    Comments (101) | Send Message
     
    Thanks Suz.

     

    So just to make sure I understand-- you are looking at a position with a longer term outlook... and not really looking to enter any spread in anticipation of the Sept product launch event?

     

    I'm beginning to think I may just need to sit on the sidelines until after the fact-- as there seems to be the camp that thinks there will be a large run up and then a big drop on the day of the event... vs those that think we will be in a correction leading up to the event-- with a big pop the day of...

     

    ??? Don't know...
    31 Aug 2012, 02:49 PM Reply Like
  • Suz Smith
    , contributor
    Comments (28) | Send Message
     
    Author’s reply » I keep AAPL spreads in my portfolio in many way shapes and forms - it is a staple trade for me so the short answer is yes, I will have some sort of AAPL trade going into the announcement. I do think AAPL will be a sell the news event, so my trade will have that factored in.
    3 Sep 2012, 10:45 PM Reply Like
  • Tech Buff
    , contributor
    Comments (101) | Send Message
     
    ok thanks... that's what I'm leaning towards too.
    4 Sep 2012, 07:04 PM Reply Like
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