AAPL has been moving up almost daily, driving the SP500 up over the past few weeks.
Today, SP500 also looking over-extended. AAPL, also very over-extended to the UP side. The FANG stocks also had a red day today on good volume.
High volume today on a very RED day, I think we see more traders taking profits here and possibly move lower.
My play is using a bear call spread, where I sell a call spread to take advantage of time decay on the call options that I sold. This works well, because AAPL must make a move higher than 315 for me to lose on this trade.
Even if AAPL goes higher by almost $3 from here, I can still make a profit on my short trade.
Thanks for checking out my 1st idea!
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Update 5/13: AAPL moved down nicely as expected. Our trade is now +$1,040.
The spread I sold for $1.44, I can now buy back for only .40 cents, giving me a $1.04 profit per contract. But, I did not close out trade today.
Tomorrow Plan: close out the trade, buy back spread for .20 cents.
AAPL would have to move OVER 315 for my trade to become a loser. its currently it's at 307.65. AAPL would need to move up $7.36. Based on that, I feel confident holding this until tomorrow will be the best move. In addition, time decay is on my side, since I sold the spread, so even if AAPL moves up, I can still close out the trade for .40 cents or so.
Trade closed manually
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AAPL fell nicely today and triggered out target.
I bought back the 320/315 spread for only .10 cents, profit of $1.34 or $1,340.