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Home › Forums › Swing Trades › Looking for the Big move in AAPL
This trade makes me uncomfortable because of the potential for big theta losses.
But in exchange for that we are setup for massive rewards if AAPL moves 50 points by Christmas.
Check out the Bollinger band pinch on the daily chart:
We are due for a move. Not sure which way but odds are higher.
Here’s the trade I like:
Buy Jan 520 straddle for 34.75 or lower.
I’m employing a 3-tier approach. I will add at 30.00 and 27, with a stop at 25. With only using a single straddle each, that puts max total risk at -1675. If you don’t like that, now’s a good time to use those AAPL mini options.
If I average down with the 30 and the value goes back up to 32, I will scale out and so on. This will be a pretty tactical trade.
This may seem like a ton of theta risk, but keep in mind that we’ve got 2 months before opex, so it really won’t hit us that hard yet.
If AAPL trades to 550 or 490 I will take profits and adjust the trade.
We got our move in AAPL, nice quick 20 points in 2 days.
It’s gone parabolic here, so I want to take some deltas off and hedge against any sort of reversion.
Here’s what I like:
Sell Dec 560 Call @ 5.00 or higher.
This will cut our delta risk, and if we continue to rally into 560 we will have positive theta.
If AAPL reverts back to 535 or so we can take off the short call as it helps to reduce our basis.
New risk with the call sale:
AAPL has gone parabolic and looks to be running out of steam. I’m going to take profits and look for a new trade.