It seems Apple has climbed it's wall of worry along with the entire stock market at a time of increasingly terrible economic figures.
I will close the Apple Spread tonight for a net price of $29.65 or best.
To execute this trade you must place two positions simultaneously:
1) Sell The (AAPL) March, 2012 $430 calls at $103.25
2) Buy to cover the short position in the (AAPL) March, 2012 $460 calls at $73.60
It is best to place spread orders in one order ticket that cuts down on order costs.
I am also going to enter a new trade to:
Sell Short the Apple (AAPL) April, 2012 $630 calls for $4.05 or best
• Portfolio weighting: 20% with a 12% delta
• ($20,000/100/$4.05) X 13%= 6 Contracts
• maximum potential profit on April 20, 2012
• ($4.05 X 100 X 6 ) = $2,430, or 2.43% for a $100,000 portfolio
Considering Apple's recent stellar move I do not think it can continue to $630 by April 20th. A breather will be necessary. Our profit is made if it stays below $630 we sell the calls so they will expire worthless and we will get full profit. If Apple does continue to move up we will hedge our bets by entering into a call spread thus limiting our downside risk.
The second trade is another one on the VIX. Looking at the attached chart of the S&P & VIX. We are due a breather in the S&P and it will likely be sell in May and go away this year again. So you may aswell plan on closing shop and taking a nice summer holiday in May. With your VIX position you will enjoy the greatest return from a stock market correction.
Buy the IPath S&P 500 Vix Short Term Futures ETN (VXX) at $24.52 or best
· Portfolio weighting: 10%
· ($10,000/$24.52) = 410 shares
