A Bearish Apple (AAPL) Trade
The Apple Worldwide Developers Conference (AWDC) is starting today and AAPL stock has been on an upward movement for past few weeks. At OptionPundit, we played this event around this time last year and made good gains. While the same approach (Bearish bias) has pretty good chance of making money, context however matters. This time around we have two key things in play a) Uncertainty around Steve Job’s return and b) General Macro Economic Environment. So read my post through skeptical lenses.
There are a lot of speculation around “what if” Steve returns and “what if he doesn’t”. Most markets participants don’t expect any significant move in stock as Tim Cook has been doing a good job in keeping both investors as well as Wall Street happy (AAPL stock moved from a lows of $80s to $146 last week.)
Let me share some observation (shared by another OPN member) on AAPL price action leading to AWDC. The price upward movement starts as early as 8 to 18 days prior to the AWDC since 2003. And on the 1st day of AWDC, it is generally higher but either the same day or in a matter of few days it closes sharply lower. It behaved the same way last year; dropped sharply on the opening day of the AWDC itself. If you are looking for past dates for an analysis, here are past AWDC dates:
- 2008: June 9-13
- 2007: June 11-15
- 2006: Aug 7-11
- 2005: Jun 6-10
- 2004: Jun 28-30
- 2003: June 23-27
While you are doing your analysis and stock price movement, you may want to look at-
- When was the AWDC date announced?
- How did the price behave leading to the date? rather how many days before price started to advance?
- How did the price behave on the opening day?
That’s for above the surface analysis. For below the surface, you may want to look at Greeks, Price/Volume analysis to assess what happened to AAPL internals pre and post AWDC. For, even if you are on the right side of the trade, you may not make money if greeks are not in favor. I am looking for a bearish trade set-up and If I get more time I shall share what trade set-up I am looking for. You may consider Bear call spread, Bear put debit spread, put diagonal, straight put, etc.
If you want to share your views or participate in a conversation, start sharing your views via comments here in this post. I shall add my trade idea later in the comments section.
Disclaimer– Past performance is no guarantee of future returns and hence pls do your due diligence before investing. I don’t have it opened yet but I may do so anytime.
Profitable Trading, OP