Failed Breakdown in AAPL

[Steven Place]

This hasn’t triggered yet but I’m going to show you exactly the setup to take.

Here’s a 30 min chart of AAPL.

There’s an obvious level of support that was breached yesterday, but it seems to have no follow through.

When a level fails to break we often see a rejection back into the previous price range.

Here’s the setup:

On a break to a new HOD ( that would be price clearance above 106.76), get long the Feb 105 calls. They’ll probably be going for 5.75 – 6.00

IF THERE IS NO BREAK, DO NOT ENTER LONG.

I like calls straight up because the theta won’t kick in as we are headed into earnings season.

To define a stop, I’m taking the open range of 1.50 and subtracting it from the day’s low, which is 103.75.

First target will be 109.39.

[Steven Place]

First target hit, time to scale some:

Sell to close HALF POSITION AAPL Feb 105 calls @7.20

[Steven Place]

Trade is going great, what I’m going to do now is reduce my risk by ROLLING the calls to a higher strike.

This will take more cash off the table but still leave me with long deltas in AAPL.

Sell to close Feb 105 Call @10.10

Buy to open FEb 115 calls @4.00

Net credit: 6.10

I’m also moving the stop up to 110.75, which is just under the late-morning pivot from yesterday.

[Author]

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