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Tuesday, September 30, 2008
Matt's Trade Log - 9/30/08
Forgot to enter yesterday's trades, so I will do those first:
That downgrade, in my opinion, can only be reasonably explained by market manipulation. AAPL is one of the strongest stocks around, and they've already taken a beating recently. Earnings are coming up in one month or so. The iPhone 3G was released in July. If you do the math, you realize that the previous earnings announcement really had no iPhone 3G sales accounted for in those earnings - so earnings for AAPL have yet to be impacted by any sales of the new iPhone 3G. In addition, we are approaching the holiday season. I expect AAPL's picture to only get rosier.
Likely, those downgrading AAPL are hoping to drive the price down so they can stock up. Many of these individuals have had to exit strong AAPL positions (causing the recent price fall) in order to cover other losses they've sustained in this market. Being able to make a killing in AAPL can help them, and downgrading AAPL can help them make a killing.
That's why I entered two AAPL trades yesterday, both bullish positions.
Yesterday I sold my RIG leap, primarily because a) I got a strong sell signal and b) because the sell criteria I established at entry were breached, as RIG plunged through 120 down to under 110. That option was purchased for $38.80 and sold just a few days later for $27.50, for a loss of $13.30. However, today I've taken on a lower-risk bullish position in RIG, selling a put spread at 95/100. Frankly, RIG would have to break a 52-week low in order for this position to fall out of the money. Sure, it can happen, but I have to say I don't expect it will.
- Sell 1 RIG JAN10 100 call
- Sell 1/2 AAPL NOV08 120/125 backratio put spread
- Sell 2 AAPL NOV08 75/85 vertical put spread
- Sell 2 RIG NOV08 95/100 vertical put spread
That downgrade, in my opinion, can only be reasonably explained by market manipulation. AAPL is one of the strongest stocks around, and they've already taken a beating recently. Earnings are coming up in one month or so. The iPhone 3G was released in July. If you do the math, you realize that the previous earnings announcement really had no iPhone 3G sales accounted for in those earnings - so earnings for AAPL have yet to be impacted by any sales of the new iPhone 3G. In addition, we are approaching the holiday season. I expect AAPL's picture to only get rosier.
Likely, those downgrading AAPL are hoping to drive the price down so they can stock up. Many of these individuals have had to exit strong AAPL positions (causing the recent price fall) in order to cover other losses they've sustained in this market. Being able to make a killing in AAPL can help them, and downgrading AAPL can help them make a killing.
That's why I entered two AAPL trades yesterday, both bullish positions.
Yesterday I sold my RIG leap, primarily because a) I got a strong sell signal and b) because the sell criteria I established at entry were breached, as RIG plunged through 120 down to under 110. That option was purchased for $38.80 and sold just a few days later for $27.50, for a loss of $13.30. However, today I've taken on a lower-risk bullish position in RIG, selling a put spread at 95/100. Frankly, RIG would have to break a 52-week low in order for this position to fall out of the money. Sure, it can happen, but I have to say I don't expect it will.
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