AAPL Analysis

Apple Inc. (AAPL)

Update 6/4/2019My short iron condor on AAPL returned, barely, to profitability, with 17 day remaining until the options expired. Under my rules, I continue to hold unprofitable positions after the 21-day mark. Afterward, rather than waiting for profit reaching the 50% of its potential maximum, I exit at any sign of a profit.

In AAPL’s case, the profit was $0.02, with an exit debit of $1.16. That price was 2.5% of maximum potential profit. This won’t be enough to cover trading fees. But that’s my problem, not the market’s. I count this as a win for my new “sudden death” strategy for exits.

AAPL fell four days into the trade and continued to fall until the exit day, when it joined the market as a whole in a sharp rise. The stock price fell $10.46 during my holding period. The implied volatility rank rose 5.1 points to 44.4% at exit, providing no help in producing a profit. (With short options positions, declining implied volatility contributes to profitability.)

The shares decline was 5.5% over 18 days, or a -112% annual rate. The options position produced a 1.7% return for a +35% annual rate.

I have entered a short iron condor spread on AAPL, using options that trade for the last time 35 days hence, on June 21. The premium is a $1.19 credit and the stock at the time of entry was priced at $189.98.

The profit zone for this position is between $206.18 on the upside and $171.18 on the downside.

The implied volatility rank (IVR) stands at 39.

Premium: $1.18 Expire OTM
AAPL-iron condor Strike Odds Delta
Long 210.00 75.5% 27
Break-even 206.18 80.1% 22
Short 205.00 84.7% 17
Short 175.00 80.1% 17
Break-even 171.18 83.2% 14.5
Long 170.00 86.3% 12

The premium is 23.6% of the width of the position’s wings.

The risk/reward ratio is 3.2:1.

By Tim Bovee, Portland, Oregon, May 17, 2019


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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