Rocket AAPL New Trade Update 01-27-21
Selling a AAPL Credit Call Spread from $155 to $157.50.
Selling a credit call spread above the market in AAPL to absorb some of the premium from $155 to $157.50 price area. We should be able to collect about $40 per contract pair, and we're risking $210 per contract pair with this trade. We're risking about $5.25 for every $1 of profit, and if this market has taught us anything in the last week it's that you should be prepared for any price action so keep your risk in line with this trade.
I don't see AAPL trading above $155 by Friday anywhere near 1 out of 7 times (which is about what we need to be profitable). I see that probability more like 1 out of 20 times, or even less likely. AAPL was trading at $127 just 8 days ago. Since January 19th, it has traded up about $16. There are 16.82 billion shares outstanding in AAPL. That's equivalent to almost $270B in market cap added to AAPL in just the last 8 days coming into earnings. With the way MSFT traded after they crushed their earnings out of the park, I see a potential similar set up in AAPL with a lot of the optimism already priced in. Options are pricing in about a $9 move in either direction on their earnings tonight.
Selling a Jan 29th $155 AAPL Call
Buying a Jan 29th $157.50 AAPL Call
You should collect about a $0.40 credit upon initiating this trade. Our max risk is $2.10 if AAPL closes above $157.50 by Friday. Our max profit is achieved if AAPL stays below $155 by Friday's close. Don't get less than a $0.35 credit for this trade, as the risk vs. reward starts to skew too much as you get beyond that level.
I don't see AAPL trading above $155 by Friday anywhere near 1 out of 7 times (which is about what we need to be profitable). I see that probability more like 1 out of 20 times, or even less likely. AAPL was trading at $127 just 8 days ago. Since January 19th, it has traded up about $16. There are 16.82 billion shares outstanding in AAPL. That's equivalent to almost $270B in market cap added to AAPL in just the last 8 days coming into earnings. With the way MSFT traded after they crushed their earnings out of the park, I see a potential similar set up in AAPL with a lot of the optimism already priced in. Options are pricing in about a $9 move in either direction on their earnings tonight.
Selling a Jan 29th $155 AAPL Call
Buying a Jan 29th $157.50 AAPL Call
You should collect about a $0.40 credit upon initiating this trade. Our max risk is $2.10 if AAPL closes above $157.50 by Friday. Our max profit is achieved if AAPL stays below $155 by Friday's close. Don't get less than a $0.35 credit for this trade, as the risk vs. reward starts to skew too much as you get beyond that level.
Disclaimer: Trading in securities such as stocks, options, indexes, currencies, and futures involve risk and should not be undertaken without due diligence and serious independent study. Options, stocks, currencies and futures trading, involve substantial risk. Subscribers may carry out their trading based on what they learn from “Rocket Equities & Options” however all risks of potential financial losses are the customer’s responsibility. TFNN, Corp. will be in no way liable for financial losses resulting from trading decisions based on this newsletter. Past performance is no guarantee of future results. Reproduction in whole, or in part, is not permitted without prior written consent. Copyright 2021 all rights reserved.