An Update on AAPL
I want to use today's update to look at our position in AAPL from yesterday. I'll go over how I'm playing the position – very simple and straight forward – but I also want to discuss what I would've been looking for in this stock for a day trade and how you can play stocks that gap below your stop loss prices.
My play on this stock was very simple. An out of the money call play with a small enough position that any gap against me wouldn't be fatal to my account. As it worked out Apple did gap against me but I wasn't worried about this position due to its small size.
Now, if you wanted to play this stock at the open, or if this had been a full position that gapped against you, there were some interesting technicals that setup overnight that could really help you save, or earn some cash. This formation is included in my chart for today – note the critical wedge that setup using AAPL's overnight price action. I typically wouldn't reference the stocks overnight levels, but after an earnings announcement or any event that causes a stock price to drop over 10% it can be a useful reference. Once you note the upward trendline plus the highs from the overnight session You've got a clean wedge you can take a position with. If you were trying to manage the position that had gapped against you, you could try to stay long as long as the stock stayed with the trendline. If you got out as soon as the trendline cracked, about 9:45 CST, you just made 10 points from the open, either a clean profit or just managing a gap below your stops. 10 points is 10 points. The trade noted for today's post are the options that one could've purchased at the open as a day trade. I do not suggest buying these options at current levels.
Trade described: Buy To Open OCT (Weeklys) 300 AAPL Calls for $12.80
Positions at time of publication: Long NOV 320 AAPL Calls