AAPL Earnings – Whammy! Plus life on the boat…
Life has been somewhat groggy here on the boat. My super duper options strategy did not work on AAPL. The stock did pop up 4 pts in afters just to be sold off by insiders to open much lower creating a doji start (lower opening gap). Well you know I don’t care. Okay. I was wrong the stock price didn’t goto $105 or higher as I was wishing so screw it I’m playing Puts on AAPL as far as it will go. Last year it has records earnings too just to have the stock price drop from the $90’s to the $65’s. I told my mom the price was going to drop no matter how good the earnings were and I was right, but she and the stupid iPhone news convinced me other wise to play a small position of calls.
I played a too far out of the money play at Feb 125 calls worth $0 now and a smaller way out of the money Put position of Feb 75 Puts and both go down. I’ve been finding this pattern of after earnings both out of the money options go down. This makes NO sense. I’m sure there is some reasoning behind it, but it makes my super plan fail fail fail.
I saw the charts turning around 2pm EST for AAPL making a small bull attempt just to go further down. I bought in at around $90.50 and currently its $89. My option is in the money (yes for once in my life time) APR 90 Puts. If it does anything like last year and the years before that its going to fall hard for a couple of months the move back up with its new iPhone product if it sells well. I’m not upset over being wrong even though it was a real money play. I was so sure AAPL would either fall very very hard or jump very very high. It did go down 6% but I was expecting a bit more dramatic hit then that. I suppose in the next few days it will be down another 10-15% if I’m correct. The chart indicators show a Put play with an engulfing red candle and a lower opening gap doji star with a reversal down hammer. My Feb 75 Puts probably will become profitable if AAPL really falls within the month which could make me two over 100% plays for Feb 07 beating my monthly increase of trading cash goals and closer to my $1 million trade mark.
As for ship life my new working schedule has made me a bit groggy, but I’m starting to get use to it. I’m making a couple of new friends I hope and finishing my qualifications to advance in rank within the next 6 months for a modest pay increase to increase my savings per month.
We will soon hit our next port call. I hope I come back with surfing pictures to blog about.
This entry was posted on January 19, 2007 by Paul. It was filed under 50/50% earnings report scenario, apple computer blog, how to become a millionaire, ROI, technical chart, trading stock options .
Yeah my 550 call on GOOG went from $360 to $30 or so the next day…. I reckon that once the news is there the potential for a really big move isn’t there any more and near month options collapse. Might make sense to get an option 3 months out so it covers to earnings releases? Options are very tricky things. So generally I use stocks, futures, and deep in the money options and don’t try to be too clever.
February 4, 2007 at 4:40 am
Hi moom. I never try to be clever, although I am always trying to think up clever things to do…As for your GOOG calls like I said about my 50/50% earnings report trade it didn’t work out the way I thought. I ended up doing around 40 practice trades on 40 earnings reports and only like 2-3 actually worked that had big enough swings. I was also finding you have to buy in-the-money before earnings to make after earnings on a big swing. If you buy way out of the money even on a big swing it doesn’t move like a normal day. It makes sense to buy enough months before NEXT earnings and play that trade, but I’d sell my options before the stock actually goes through earnings (you can search GRMN) and read about me going through Garmin Co. earnings. That sucked.
Personally right now I stick to only Call and Put options because I do not have the capital built up to just live off of interest, dividends, and wealthy people cash flow income. Plus the money I do make from options I want to use to pay off my new car, my existing rental home, and a second home I want to live in. You can say in that form I am building up capital by being totally financially independent if I can pull it off. Trading options can be tricky if you try to be clever which I keep finding out. Although I’ve learned a lot I do keep making painful mistakes from being clever because I am so eager to get out of this rat race I’ve been in since I starting doing business practices when I was 19. I know I’m a smart kid…well I guess adult now. I just need to act it when trading. later -FN
February 4, 2007 at 11:50 am
I still have net trading losses on short-term trading since I started trading around 1998. Now I’m at least not losing money and beginning to show signs in the last year of actually making money from trading. When all those losses are back (about $15k to go at the moment) I will finally think I’ve got it and am a profitable trader. So it can take a very long time to work out how to trade profitably. Of course I’ve made big profits from long-term investment in the meantime. I’m 42. You’ve got time to work things out in the next few years. Don’t be too desperate to make a profit -that tends to lead to doing dumb things and losing money. Most people lose money at trading and give up.
Forget about become a millionaire in 10 months. That ain’t going to happen….
My AAPL trade worked because I used stock and traded AH. Still it was very high risk. Mostly I am using my models to trade the index. That’s more the level of risk I like.
February 4, 2007 at 2:48 pm
Yeah. I have no excuses when I have made dumb trades. I really don’t think they are dumb because I did do research and thought out my trade before I traded. The market went the opposite direction I anticipated. Although if you have been trading since 1998 and you’re 42 you’ll have a lot more wisdom going through those very volatile years and you trade with a different style. I don’t agree with you on not being able to trade up to $1 million starting with low capital. If you are a great trader, your understand the market and how it moves because you’ve watched it for years, then you should be able to trade better with the market making more profitable trades. I see option traders making 100% easy in a month. Making 100% profit on an option is not the same as waiting in a long position on stock to make over 100%. Your stock has to be moving fast and great fundamentals to make it happen, but with an option a stock can move modestly and you can earn 100% because you are trading a smaller dollar amount. I feel I am going to get close to my goal. I’ve already made 300% divided over the past 3 months so I’m meeting my goals. It’s going to get more difficult when I start trading a larger amount of capital because if I am wrong it will push me back, and like you mentioned making me a bit desperate to meet my goals which can turn into bad trades. I’m trying my best to only do solid trades, but like I said sometimes 1 piece of news or another related companies bad news can hurt my option attached to my stock. At 26 I believe by the time I’m 29 and getting out of the U.S. Coast Guard I’ll have more knowledge and understand better how the market reacts to news, politics, and economic reports to make more profitable option trades. Over the past 3 active years of option and stock trading I feel I am just breaking even now and understanding a good trade over a bad trade and that’s my motivation to keep getting better.
February 5, 2007 at 3:44 am
Sounds like you’re doing great. But if people could consistently do 100% per month they would very quickly get to multi-millionaire status by trading from very little – I don’t think we see this in the real world. Therefore, it must be very hard to do. I’m a scientist and look at the facts 🙂 Unless all those excellent traders have little capital and spend everything they earn. Getting to billionaire status is very much hard because different strategies are needed as trade size gets bigger. Still there are very few or no people who became billionaires from trading their own account alone from a small amount of money. Those like Prince Al Waleed started off inheriting huge amounts. There are only 700 or so billionaires in the world anyway. And only 70,000 people in the ultra high net worth category of $30million plus in investable assets. So it isn’t as easy as it might look. I think it is certainly possible to double net worth in a year or in a couple of years at least now and then by trading alone, but you need to start from a big capital base otherwise you’ll be spending too much of it. Also living somewhere with low taxes would help 🙂 I’ll follow how you do.
February 5, 2007 at 4:05 am
You don’t see many average investors get to multi-million status with low capital in the real world because it isn’t taught to them. They don’t know they can or should I say they are taught that it isn’t possible. What you believe is your reality. When I was first trading stocks and got lucky trading a couple of dollar stocks to instantly double my money in a couple of months I knew it was possible. I never even knew what options were or what they meant. When I finally took that extra step to study and learn them I was blown away with the possibilities and becoming a millionaire in a shorter period of time because more of a reality. Most regular investors dont’ make 100% because they don’t do options just as you’ve said twice “they are too risky”. Well I don’t think that at all and I consider myself just an average trader still.
As for a scientist I’m sure you are more of a fact guy. Me, I’m an art guy. I don’t need all the facts to make a great trade I just need to understand the picture and feel my instincts. Some of my best solid trades have been on instincts rather than facts. I guess with options you do have to trade more on instincts because facts are yesterdays news and its only as good as yesterday. Although trading options going into earnings are facts. If you know a company is doing well and you see the products being sold left and right I think that’s enough fact for me to know the stock will go up. As for traders not having low capital to start from I’m sure if they’ve made it to a millionaire they wouldn’t be trading a small amount anymore. It wouldn’t make any sense, but I do believe americans are taught to spend spend spend so yes they probably do spend all the money they make on expensive cars and a monsterous house with a big mortgage.
As for making it to billionaire status and high wealth status most of these people the majority received it from inheritance. The biggest billionaires like Bill Gates, Warren Buffett, and Michael Dell did it by themselves hence why they are on the top of the list. I believe their are many multi-millionaires without public profiles that rather keep their wealth private. I don’t believe you need a lot of capital to make more money to become a millionaire. You are right about size of trades. My trade sizes will get larger and larger with the more money I grow, but I can still keep a $2000 or $5000 money amount trade and get to a million within a short period of time if I was able to keep making 100% a month. Compound interest is a fact and its been proven with long-term investors that take care of their money and pick the right stocks. I’m not saying its not going to be hard. It’s been hard so far, but its also only gotten easier the more and more I learn. I might not make it to $1 million in 10 months, sure its a possibility, but is it likely I might make it to a third of my goal? Highly likely and that is still doing great.
One other thing to mention as you said expert traders not making it to billionaire status and its hard to make 100% month. Very true. My mentor told me many will do okay if they take a class on investing, some will take it more seriously and do very well, and then the last few individuals will make it to the 1% of the top that do make it to billionaire status. Right now I think I’m doing well for my age and how much I’ve made of my small capital, but I’m not writing a diary every day, doing practice trades, studying charts, and trying to understand all the market data daily just to be above average. I want to be ultra-successful and doing this is hard work.
February 5, 2007 at 4:48 pm
OK – I’ll keep tracking you and seeing how you do… I am mainly trading futures now using my model and intraday stochastics, doing what I call overnight trading. I only dabble a little in trading stocks. Mostly I leave that for my long-term investment nowadays. So far it is going well. Just now I am establishing a short position in NQ futures. The model is turning to short again.
February 6, 2007 at 3:31 am
mOOm, again thanks for the comments. since you are an economics professor futures might come a bit more natural since if you understand supply and demand well you probably have gutt feelings about futures being sold. futures do keep selling and never stop because they follow the world markets, this is as much as i know. i’ve got an introductions to futures book i need to read just to be informed. right now i’m focusing on just options (i study stocks of course to play the options). keep watching me. telling me if i’m doing a bad or good job. i want it because i really don’t have anyone to discuss my trading with so any comments i get im very thankful for. i know we trade different things but we both have the same goal in mind which is retirement or a dollar amount goal. my biggest goal is to pay off my parents $90,000 mortgage they have left because i feel that’s a true pay back for how they have supported my risky business life style.
February 6, 2007 at 5:12 am