Options Trading Newsletter - Issue #125
Out of Juice... [Options Today...Bullish Trade on AAPL - Trade Management]
Out of Juice… [Options Today…Bullish Trade on AAPL]
Squeezed them dry!!! Do people still squeeze orange juice nowdays with their hands? Or have they gone advanced using a juice extractor? I am somehow still doing it with my bare hands, less juice but satisfying with the smell of zest on the first squeeze. After a few squeeze, you could barely extract any juice out of the quashed pulps and they get discarded for another orange. You will be wasting your time and energy if you still continued squeezing on that dry orange, even if you tried with all your might.
Oh…enough said about squeezing orange and back to topics on life…In reality, we live through life just like squeezing oranges in a way. Just that we are the one who get quashed all the time. Ever wonder that how we are full of energy at the start of the year going through our resolutions and goal setting and then executing them with vim and vigour… then half year past and we are now in August and our energy get drained as we see only a fraction of what we wanted to achieve gets done… and to look at the calendar and counting the remaining months against the “to do” or “to achieve” list seems impossible… okay…we have somewhat achieved a dry state them, just like the 3rd time squeezed orange. So what next? No juice is going to come out anymore…we are exhausted now… well, everyone gets exhausted every now and then but does this mean we will stop? Hell no…. right?
What we need is to rejuvenate ourselves, get some new energy booster, review achievements, study mistakes and reset the plan and get going again. No point thinking of whether we can or will ever achieve what we planned for but just sulk it up and continue your journey. If you need to take some time off to refresh, go ahead, do whatever it takes to get your engine boosting again, just like the start of the year when it was revving 110%.
"It's not about how hard you hit; it's about how hard you can get hit and keep moving forward." – Rocky Balboa
SPX (4478)
Looks like there’s just too much news to stomach this week and SPX had retraced down below the 4500 level. SPX weekly decline is 2.27%, 104 points and for a long time we had not seen such deep retracement in a week. Everyone expected some pullback and the newsflow just gave it some opportunity for the uptrend breather.
Starting with Fitch downgrading the US debt rating from AAA to AA+, one notch down which sent treasury yield up and bond down last week. Market had less of an effect as compared to data from ADP Payroll or Non-Farm Payroll. Nevertheless, such kind of downgrade gives a negative overall market view of the state of affairs of the US government and its economy. It’s always nice if you could spend more than you can and also to rollover borrowings whenever needed. If it was a real life person doing it, their fate will be much less favourable. Too much is at stake for the US to fail. Yet Yellen, the government, including Warren Buffet have brushed it off.
ADP announced a very positive labour market but the official non-farm a more to forecast number. In anycase, Friday was post earnings for AMZN and AAPL each going its own direction, AMZN up and AAPL down. AMZN had lost half of its uptick while AAPL has almost doubled its downtick at the end of the Friday session.
The next level of support for the pullback would be at 4300 level and would not be impossible to reach this level with CPI on Thursday expected at 3.3% which is higher than last month’s actual signifies than inflation is not going to come down below 3% anytime soon. With oil prices on the surge since June, things are not going to be cheap for the past month’s measurement.
The trading range for the week is between 4400 and 4550.
NDX (15749)
NDX is down 3% for the week, 476 points down. As the magnificent 7 continue to fail the market, even GOOGL, AMZN and META could no longer support the rally and take a bit of breather.
With earnings almost done, there would be no major companies to carry the market anymore for now. There would probably be some profit taking at the next sign of red in the next days or weeks.
As there is no longer momentum to breach 16,000, a retracement to 14,000 would be a reasonable move by NDX. A high CPI and fear of a further hike in September would bring us there.
The trading range for the week is between 14900 and 15600.
HANG SENG INDEX (19539)
HSI failed to maintain above the 20,000 level and retraced back down to 19539 end of the week. Nevertheless, we are still bullish on HSI and entered a bullish position at around 19500+ level, seems to be holding so far.
Any pull back would be an opportunity for long positions. We would keep an eye on this and keep the stops below the daily 200 moving average level. HSI had managed to hover around 19300 and 19500+ level closing relatively unchanged today, despite a weak US market in the past week.
OPTIONS TODAY [Bullish Play on AAPL - Trade Management]
If you have followed our play, the trade went down south with AAPL being sold down after a lackluster sale performances on its devices. The trade is in losses of around $700 with the bigger part of the loss coming from the 2 Naked Puts, around $553. Nevertheless, our trade entry was on the basis that we see support at $180 and so far it has not gone down below this. The Bull Call Spread is in a loss of $155, we would probably close this position if we see retracement of AAPL back up to $185+ level.
The naked put, we will monitor and manage separately to see if we can still come out positive from the trade. As long as AAPL stays above 180 till expiry, you won’t lose on this trade. We will keep you posted on what action we take on this position in the next days or weeks.
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Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
MYstyework is an Online Financial Literacy Educator and materials provided is solely by MYstylework and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. MYstylework, through its contents, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. MYstylework is not in the business of transacting securities trades or an investment adviser.