My Fun with Apple

by JDH on April 18, 2020

This week I decided to play with Apple options.

Apple, in case you haven’t heard, is a really big company; as goes Apple, so goes the market.  If Apple is up, it’s likely the market is also up, and vice versa.

As you know, we had a crash, and then a partial recovery, which leads to the obvious question: is the crash over?  I stated my opinion last week: we need to retest the lows first, so no, it is not clear sailing.  Apple will give us an indication of where we are at.  The weekly chart shows an obvious double top, so I thought it was a good opportunity to buy some puts.  Here’s what I did:

April 13 and: bought Apple, April 24 puts, strike $257.50, at prices that averaged around $1; I sold some of them on Thursday at around $1.30, then bought more around 70 cents.  Then on Thursday night somebody announced that they were working on a vaccine for the virus, so that made futures go up, and since I was going to be in a meeting (a Zoom video conference) at 9:30 when the markets opened, I put in a sell order, at market, for half of my position.

That was a mistake.

I got filled at 32 cents when Apple opened up.

But then it reversed, so by the time I was able to check it the options were back to $1.30 so I sold my other half, at a nice profit.

What was the net result of all of this buying and selling?

I made $200.

So, given the capital invested, and the risk, this was a stupid speculation.

I was right about the direction of Apple, and I’m glad I liquidated my position on Friday morning, because if I had held to the end of the day those options I sold for $1.30 would have been worth 40 cents, so my $200 gain would have turned into a significant loss.

Stupid, on my part.

Oh well, perhaps next week I’ll be more prudent in my approach.

I doubt it, but one can only hope.

If Apple gets back to around $287 I’ll be buying puts again, because I can’t help myself.

Tune in next week and see what happens…..