Don’t Get Caught in the Moment It Can Cripple You: Don’t be a Pig


Yesterday late afternoon I started stalking Apple, ticker AAPL, for a short options combination trade. The chart above shows a string of tighter range days unable to break above 265 over the last 2 weeks, and today’s move down. I was looking at 1×2 Put spread. Here I was looking to buy August 240 puts and sell both a August 230 and a 220 put for each one bought. The trade would put me net long AAPL at 210 if the stock were to close August 20 below 220. I am willing to own Apple at 210, but was betting that the combination would rise multiples if the stock started to fall and I would most likely sell it before expiry. The market for this combination was 4c bid and 6c offered just minutes before the close. I stuck to my bid and did not trade.

As I write this the stock is down $5.80 at 253.40 and the spread I was unwilling to pay 6c for yesterday is now showing a 41c/46c market. It could have been a 680% return in less than one hour of market exposure……if I was not a PIG.

Moral of the story, get caught up in the moment, fight for every penny, but remember the broad context of your trading premise. Like the lottery you’ve got to be in it to win it!

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog