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SwagatoBhatta's  Instablog

SwagatoBhatta
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As a novice trader, I look for trades that are of higher probability and better returns. I look for shares which has mismatched price between expectations and reality. And I try to jump before others into such trades.
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  • AAPLE: A Cautious Approach Using Covered Calls

    AAPLE

    Will it cross 700 by next week? Only time will tell! My strategy for a stress free sleep while I put money to work is outlined next.

    Right before the closing bells of Friday, I bought 1 Covered Calls 690 Strike Price Sept Expiry. So I booked roughly 900$is in premium.

    I am assuming my commission is low or almost nil. Honestly, the commission is not low or nil. I am doing a rough calculation just for simplicity purpose. I am also assuming that I want to keep $300ish (or $3/call) of premium no matter what. This is my income for using my head.

    Exit Strategy

    1. I will exit when the price of stock goes below $685.

    Let's assume that the stock goes below 685. The call options should lose in premium and considering that theta is a friend in my case it will lose heavy. As I have sold calls, I will be making a profit from the calls I sold as time goes by && price goes down && stays above 685.

    Consider closing price of apple to be 691 (for simplicity reasons), (691-685 = 6$) $6 is what I am willing to chew before I sell my covered calls. What happens at $685 is very interesting.

    At $685, I would have lost $600 from 100 shares I have. At the same time, the price of calls should come down substantially to provide me more than $600 in profit from there. So those two will provide me a total of $0 in profit. I am assuming $3 my own charge for my work and any additional risks I am not seeing at the moment.

    2. If the share price goes above 700, then the covered call will be called. I have already gained the premiums by selling 1 call. So I end up with 900ish of profit by just holding the stocks almost until expiry which is at 21st Sept 2012 or less than 10 days from now almost.

    3. If the price is below 700 but above 685, then it is a matter of calculation as to what will be my profit. Nevertheless there will be a profit.

    To sum it up

    iff ( Price_aaple <= 685){

    · Put a stop loss of 0.2+marketPrice to the calls;

    · Sell the 100 shares making it a pure naked calls;

    }

    I am no immune to buying high risky options of AAPL. However after buying some really risky 700 September options when it just touched 680, I had to wait for almost 2 weeks for it to retrace most of the loss. I was able to close those positions with a loss I felt I am comfortable closing. I would have loved to close at breakeven and better yet at profit. However, I close it anyway seeing that the amount of loss has come down to level I can chew, feel bad and move on.

    But I was right thinking that this monster will rise. And did we have a rise that many have not seen in a very long time. I do not want to stay outside the market and feel bad. So I employed this following strategy with two assumptions

    I will sleep at night after checking the opening of the market for 30min-1 min.

    I will try to get up early to see the close.

    My main idea is not to check every tick and not worry about losing my money.

    I am bullish on aapl and I also have 10 vertical calls strike 695/725 November Expiry. In other words, I expect the price to rise way above 725 before that. But considering the rise it had in last three days, I do not think I am stupid to be a bit cautious in very near terms.

    Disclosure: I am long AAPL.

    Additional disclosure: I have 1 covered calls 690 strike price expiring in a week. I also have 10 vertical calls 695/725 strike price expiring on November.

    Tags: AAPL, Technology
    Sep 15 2:13 AM | Link | Comment!
  • An Apple A Day Or Week Or Month Will Keep Your Portfolio Healthy!

    Before you go ahead, please take a look at the last two insta blogs I wrote. Also, check the dates I wrote and the way the prices of the shares/commodities moved after I wrote it. This will be my third blog at Seeking Alpha. And it will be about AAPl, aka AAPLE. Nope it is not the apple you can buy from market. It is the equity everyone looks at with wonder.

    Let us deep dipper at the following chart. One can easily see that the price nicely bounced between trend lines. To tell you truth for a few moments I was a bit scared when I saw it broke the upper trend line. But I was happy to see it bounce back. As we can see that within next week, a large price increase is expected. The only issue is we have one less day to trade. I have 25 Call options AAPL Sept strike 700 (monthly). I may be entered the price a bit too early this time at 9ish price. However I am certain that it will increase. I expect the price to go above 705 and can touch 720. If it touches 720, then I will have about 11$ before expiration per options aka 27500. Considering volatility to increase and considering that Ben has given a A OK for printing money, there is no reason to assume that the price will decrease from here.

    Also remember that AAPL just won against SAMSUNG. Also recently AAPl has gone all the way against all the good products from SAMSUNG even the S3. Also remember the new iPhone, iPAD, iPOD, iTV. It should be insane price increase for AAPL coming up!

    (click to enlarge)

    Disclosure: I am long AAPL.

    Tags: AAPL, Tech
    Sep 02 7:51 AM | Link | Comment!
  • The EURO Crisis Or Is It?

    We all have some ideas on what is happening around the world and especially with Euro and USD. However, few really will look at it on a technical point of view. When one does, one will go so deep inside it that mind will start to rotate. I am more of a trader who looks at a trade from the most simplest technical point of view possible. Always remember "Keep it simple, stupid". So, below is the simplest support-resistance of the EURUSD.

    As one can see that the EURUSD has nice respect for the trendlines. The "no love area" is the place where it is hard to trade. WHen it breaks either the region outside that, it will be either a big bullish or big bearish region or more than 1000pips. And I will be there to get it hopefully.

    (click to enlarge)

    Tags: EURO, USD, EURUSD
    May 04 7:11 AM | Link | Comment!
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