Trade Alert: Update and strategy for our homerun Apollo trade
It really bugged me once when I was still in middle school and I saw Duke coach, Mike Krzyzewski say after his player made a last second shot to beat North Carolina and my favorite player Michael Jordan, say, “Sometimes it’s better to be lucky than good.”
But then he went on to explain that he had prepared his team, he had prepared himself, his team had sacrificed and worked endless hours to be in the position to be “lucky” when the game was on the line. I haven’t watched a college basketball game since the last time I walked up the ramp after losing a game as a walk-on as a Lobo at UNM and I’m very leery of college sports to this day. But as I pointed out the other day in regards to the lessons I learned from controversial Wall Street figure, James Cramer, I’ll take lessons any where I can get them. And I still remember Coach K’s talk that day and the lessons in it.All this relates to our big Apollo homerun this morning. Just two trading days ago, I’d written this post “Trade Alert: Nasdaq 3K Magnet and Buying some APOL puts” and explained to you guys the following:
“This morning, I’ve gone ahead and added to my Apollo puts. I bought APOL puts that expire out in May of this year with strike prices anywhere below $50 a share. Buying a put is a bet that the stock will go down because it’s a contract that guarantees me the right to sell 100 shares of APOL at whatever the strike price is, say, $50 in this case. So for every 1 APOL May $50 put contract with a price of $2 costs me $200 in capital and gives me the right to sell 100 shares of APOL at $50 at any time between now and the third Friday of May. If the stock were to drop to $40, I’d be able to sell these puts for $10 each, for a $800 gain on each contract vs the $200 I spent on each contract. If the stock were to stay above $50 a share, the puts would expire worthless because there’s no sense in me trying to exercise the right to sell APOL at $50 when it’s above that price in the markets anyway, meaning I could get more by just going out and selling the shares above the $50 strike price. And all this will play out before the third Friday in May when these put contracts expire. “
Cody back here again in real-time and here today, Apollo has crashed nearly 15% as it announced that its enrollment and earnings aren’t going to be as good as they’d expected.And so those Apollo puts I just bought for $2 are now, just two trading sessions later, going for more than $6 each — a 200% plus gain in two days.Loading up on Apollo puts just two days before they warn and crack is pretty darn “lucky” no matter how much time and energy and homework and analysis I did.I’m selling 1/2 of these puts right here and holding the other half. I think APOL’s got more to fall and I plan on being short or owning puts in this stock for a very long time to come. But I’ll take about half of these huge gains we just made off the table.As Cramer himself would say, “Bulls make money, bears make money, pigs get slaughtered.” Let’s not be piggy, let’s take home some bacon. (Did I just take the symbolism too far now?).No other trades for me this morning as the markets are mostly flat and continuing to climb steadily higher.
