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Trade Alert: Putting a hand on a hot stove

October 8, 2012 by Cody Willard Leave a Comment

Put your hand on a hot stove for a minute, and it seems like an hour. Sit with a pretty girl for an hour, and it seems like a minute. That’s relativity. – Albert Einstein

Apple’s down 2% on the day which takes it down a full 10% from its recent all-time highs. Recall that we’d been selling a good bit of our Apple calls while the stock was at the highs and since then I’ve been patiently waiting for the stock to pull back harder than it has been. Indeed a couple weeks ago, I wrote:

I do not think that there’s “enough fear” to be getting aggressive in Apple after it simply pulled back to where it was trading just a couple weeks ago. You know that I will be pounding the table, jumping up and down and screaming about buying stocks and getting aggressively long when the markets are in panic/fear mode next time. This isn’t it.

I’m not sure that we’re seeing much panic in Apple’s stock yet, but we are definitely seeing some fear rear its head here in Apple. We buy when others are fearful, right? And we sell when others are euphoric, right?

I’m not going gangbusters or buying back all the calls I’ve sold at higher levels, but I am going ahead and starting a buying tranche approach to building back up the Apple exposure again.

Recall that when I sold those Apple calls for those huge gains back when the stock was running towards and hitting $700 a share that I talked about how when I would look to buy Apple calls again that I’d buy longer-dated and higher-strike price calls than I’d been selling. That way I keep a big chunk of my profits from the prior Apple calls I sold, but I get my upside leverage opened up again if the stock is to run back to new highs.

I’m bidding at the market and slightly under the market for some Apple calls with strike prices near $700 or below and expiring out in April 2013.

No other trades for me so far today.

 

Related posts:

Trade Alert - The best way to set up for higher rates
Trade Alert: Market's Greed Is Back (And Getting Out Of PYPL)
Un-Trade Alert: Earnings didn't save it, so what's next for the stock market now?
Latest Positions Part 1: TSLA, UBER, FB, TWTR, SNAP
Trade Alert: Trimming and hedging into the euphoric rally (and I'm now bullish on some pot stocks)
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Filed Under: Trade Alert

Disclosure: At the time of publication, the firm in which Willard is a partner and/or Mr. Willard had positions in some of the stocks mentioned above although positions can change at any time and without notice.

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This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or cryptocurrency or token any other product or service by Cody Willard or any other third party. Furthermore, nothing in this is intended to provide tax, legal, or investment advice and nothing in this should be construed as a recommendation to buy, sell, or hold any investment or security or cryptocurrency or token or to engage in any investment strategy or transaction. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation.

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