Another AAPL trade
October 23rd, 2007Well, I started trading a little in my non system account. I was running both accounts with my system, but that was just too much trouble, so I moved money and started trading what was left in the this account.
Well, AAPl earnings were about to come out, and i bought an iron condor. Crazy you think ? If AAPL has great earnings, I am screwed. Well, yes and no. While IC’s are long theta, they are also short vega. There is still a month left in the trade, and I probably, err , will not hold this one.
So AAPL’s volatility was up pretty high ~55%, from the usual 40%. So I wanted to sell, and we have vol crush afterwards. With such high IV, the profit margin widened signifigantly. My margin is $5 a spread, and if I can pull $0.7 out of the trade, I will be happy. 14% return in a day at least.
Iron Condor AAPL NOV07 200/195/155/150
That is ssot of a shorthand for:
BUY AAPL NOV07 200 CALL
SELL AAPL NOV07 195 CALL
SELL AAPL NOV07 155 PUT
BUY AAPL NOV07 150 PUT
Getting in Credit $1.65 ($0.75 on the call side,$0.90 on the put side ) risk $3.35, for a risk/reward of 49%. You may ask why is the risk not $8.35. The reason is for that to happen, AAPL would have to trade above 195 AND below 155 at the same time.
Exit : Close any side is less than $0.20
: Close when capture 60% of profit, ~$1.00, for a 25% profit.
Earnings came out after the close, and AAPL was trading up 10 points after hours. Still 10 points under my short side.
Will update this on Wednesday.

