| This Trade Was Closed June 20, 2012 |
I forgot to update this trade before I exited. Needless to say, I got spanked. However, my position sizing was based on the margin + a little extra so the loss wasn’t larger than my winners (which have been a little scarce lately). Lesson learned – don’t short AAPL.
Original Trade Post:
This is a split strike combo or synthetic short position. I find AAPL options to be difficult to price without something like this. I would note for anyone looking at this that I am ripping off an idea for an article I found on this site several months ago. I have paper traded it for a while and used it in real-life a few times. It has a naked position (short call) but I like it as an alternative to shorting the stock.
Long June 555 Puts: $16.90 per share
Short June 560 Calls: $16.70 per share
Net debit = $.20 per share plus margin of $11,200 (cough, cough)
Right now I have a lot of money stuck in cash (anyone else in this boat right now? ) so the margin isn’t a problem, but my biggest concern here is that this trade is overweight for my portfolio. Not by much, but enough that I will keep it on a tight leash.
Trade Details
- The Ticker: AAPL
- Cost: $.20 net debit per share
- The Trade
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Long June 555 Puts: $16.90 per share
Short June 560 Calls: $16.70 per share
- Trade Opened: May 23, 2012
- Trade Closed: June 20, 2012
Chart courtesy Finviz. Click to open larger.
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