Monday, October 20, 2014

AAPL update

I've updated "AAPL and KO: Volatility plays" with a major change in how I structured the trade. Here's the update, and it also appears on the original post, which contains a full analysis of both the proposed AAPL and KO trades.

I've switched direction on AAPL, structuring it as a bull put vertical spread, because of the strong intra-day upward momentum that carried the price up 1.6% from the pre-market to a half hour before noon New York time. The price has since pulled back a bit, but it still appears to have sufficient power to suggest a bullish mood.

I structured the new trade as short the $96 puts and long the $95 puts, sold for credit and expiring Nov. 7. It is a bit closer in to the at-the-money mark than the former bearish version was, a change I made to get the risk/reward ratio down to where I was happy with it, generally around 3:1.

The short leg has a 65.9% chance of expiring out of the money; my requirements is 60% or better. The leverage is 3.9:1.

In my discussion of both stocks in the analysis posted this morning, I alluded to the difficulty in picking direction for such short-term trades. Because they are of such short duration, the judgement, I'm finding, of what which direction works can change very quickly.

The following chart was snapped shortly after my trade was executed.

Click on chart to enlarge.
AAPL 10/20/2014 approx. 2:10 a.m. New York time, 5 days 10 minute bars

By Tim Bovee, Oct. 20, 2014, Portland, Oregon


My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My very short term volatility trading rules can be read here.

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at

No comments:

Post a Comment