- This topic has 4 replies, 1 voice, and was last updated 8 years, 1 month ago by
.
-
Posts
-
Big, big move in AAPL on earnings, and it’s probably going to drift (but not rip) higher into its split date.
We are going to start with a call calendar with a little upside bias.
The reason we’re doing calendars is because the implied vol is 19% which is darn low for the options market.
Buy to open Jun/Jul 600 call calendar for 3.80
We will add to the trade at 580 or 620.
AAPL is forming a head and shoulders top, so I’m going to add some lower flys to get my delta to neutral.
Buy to Open Jun/Jul 570 Put calendars at 3.85
As AAPL has shifted now and looks ready to break out, we’re going to add our 3rd round of calendars.
Buy to open Jun/Jul 630 call calendar for. 3.65 or lower
This will put us in a trade with opex breakevens of 565 and 637. Since we have added more capital, we will make our target return on risk 12-15% instead of 20%.
The pullback certainly has helped our trade, but we’re going to put on some upside exposure just to get our deltas almost neutral.
Buy 1 AAPL Jul 660 Call @9.50 or lower
We are now in a good spot.
The stock is running higher, the IV on the low strike calendars is rising, and the premium in the near term options is dropping. This is leading us to a trade that is sitting at a 12% return on risk, and I want to bail on it here so I don’t have to deal with post-split trading headaches.
Sell to close AAPL Jun/Jul 570 put calendar @ 1.25
Sell to close AAPL jun/jul 600 call calendar @4.00
Sell to close AAPL jun/jul 630 call calendar @6.73
Sell to close AAPL jul 660 call @12.95
- You must be logged in to reply to this topic.