Members Trade Alert: Sold AAPL July 100/110 Call Spread.



BotTrigger Trade Alert: $AAPL sold our July 100/110 call spread at $9.58 for a 18% gain since we purchased this @ $8.10. With yesterday's reversal and today's gap-down, this is a nice spot to let this go, especially considering that the max value that this spread can achieve is $10 so long as AAPL closes @ $110 or higher by July expiration. And our goal is to not sit on this spread till exp. It was merely a placement holder to help us hedge against both downside & upside risk. This spread has done the bulk of it's job to help us make sure we were hedged when AAPL was reporting E numbers. We rotated the gains we had from the March spread (+80% gains) into the July spread that had a max value potential of 23% when we purchased this originally @ $8.10. And because of this rotation where we were also able to increase our contract size from 200 contracts (March Spread) to 232 contracts (July spread) without spending an extra dollar (besides commission). So we are cumulatively up 122% on our AAPL spread trade. Now it's time to go to cash and stalk the next meaningful pullback scenario. And just keep in mind, that even if AAPL continues to still run higher, the July spread has about another +4% of upside left in it. The value proposition at this point is much better to go to cash and stalk an entry when AAPL get's discounted again. That will happen - we just have to be patient.

In the meantime, our January 110/120 call spread is the largest weighted allocation in the porto and the greatest benefactor of this rally. Purchased @ $4, she is now trading at a present value of $7.75 which is roughly a 93% gain of unrealized gains. That position has a max value of $10 for a full 150% gain so long as AAPL closes @ $120 or higher by January 2018 expiration. So you can see, that this still has a about another 57% gain potential of upside travel. Being that it's deep-in-the-money and with oodles of time, we have absolutely zero notions about selling this. It was designed to withstand corrections and weather a storm. AAPL trading at $120 by next January is, in our opinion, a no brainer. Again, if AAPL traded at $120 by next year that would mean that AAPL would officially be in a bear market. @ $120 a share AAPL's PE ratio (price to earnings) would significantly contract. $120 in 2016 is not the same as $120 in 2017 and not the same as AAPL trading @ $120 by January 2018. The company's valuation would be worth less even though the share price was the same, because of PE contraction. We don't expect that to happen. Right now we're going through the next phase which is called PE Expansion. For expansion to occur the share price needs to move higher. But we're hedging the possibility that something ominous could take place. And if it did, then this spread would be there to make sure you still rounded the year with a handsome 150% return on the investment.


Some of the greatest pearls shared by Jesse Livermore:

“Money is made by sitting, not trading.”

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

“Buy right, sit tight.”

“Nobody can catch all the fluctuations.”

“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

“It takes time to make money.”

“Don’t give me timing, give me time.”