Trade Alert – (AAPL) – TAKE PROFITS
SELL the Apple (AAPL) October, 2017 $167.50-$172.50 in-the-money vertical BEAR PUT spread at $4.80 or best
Closing Trade – NOT FOR NEW SUBSCRIBERS
expiration date: October 20, 2017
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I am going to take the gift of a sudden $7.00 plunge in Apple shares this and take profits in my short position.
The reviews are out on the new series 3 iWatch, and they are dreadful.
Apparently it JUST doesn’t work, with problems in battery life, connectivity, and security.
I expected something just like this to happen after all the hoopla surrounding the iPhone X launch. I just didn’t expect it to happen in only two days.
So I am therefore selling my position in the Apple (AAPL) October, 2017 $167.50-$172.50 in-the-money vertical BEAR PUT spread at $4.80 or best.
Buy coming out here we don’t have to lug the position for 21 days more into the October 20 options expiration.
Yet we get to keep 66.66% of the maximum potential profit. The risk/reward overwhelmingly favors taking the money and running.
By exiting here you have earned $920 in only two days, or a 9.09% return on your investment.
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Yes, I know you thought I was completely MAD selling short Apple shares when everyone else was going completely gaga over the stock.
However, I thought were in for at least one more month of sideways action in the FANG stocks.
Let’s face it. The good news on Apple is OUT. It has shot its wad.
There won’t be any deliveries for two more months.
The only possible news that can come out for now will be of the negative variety, like there are supply chain glitches, or the phone doesn’t work at all once the large shipments go out.
If Armageddon doesn’t happen to Apple, then at least we are entering a quiet time until they start to ship, in which case we STILL make out maximum profit.
This was a bet that Apple shares would NOT rise above $167.50 by the October 20 option expiration in 24 trading days, compared to the current $161.
To lose money on this trade Apple would have to have rocketed to a new all time high quickly, which it wasn’t going to do during these uncertain, volatile times.
The market in general is now in wildly overbought territory, with my Mad Hedge Market Timing Index at a nosebleed 81.
It goes without saying that this was not a riskless trade. But with Apple up 62% over the past 12 months, we can afford to take the occasional flier.
If you don’t do options, stand aside. Longer term, I think Apple will continue to appreciate, possibly to $200 by some time in 2018.
We just have to give the market a chance to have at least one more heart attack.
This was the 25th consecutive profitable trade in the Mad Hedge Trade Alert Service.
By following my proprietary Mad Hedge Market Timing Index over time, you find that accidents like this constantly tend to happen in your favor.
The Index was at a nosebleed 81 when I strapped this baby on. Now it has backed off to 76.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bear Put Spread” by clicking here
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
Here are the specific trades you need to execute this position:
Sell 23 October, 2017 (AAPL) $172.50 puts at…….………..…$18.00
Buy to cover short 23 October, 2017 (AAPL) $167.50 puts at…$13.20
Net Proceeds:………………………….…………..………………..$4.80
Profit: $4.80 – $4.40 = $0.40
(23 X 100 X $0.40) = $920 or 9.09% in 2 trading days.
