AAPL - Earnings this Monday October 20. Buy OTM Oct24 calls on Monday

That's a loaded question, you haven't included Selling ATM Naked Calls and Puts, which would be my answer. And now you have market conditions that render options useless - who would buy them? :eek:

 

It is not a loaded question. You have categorically stated your dislike of credit spreads because of their poor risk/reward ratio. I simply asked you to compare the outcome of a typical FXfx trade (OTM long call/put) versus an OTM credit spread when the underlying doesn't do as you expect.

I don't think "risk/reward" tells the whole story. Expectation comes closer. You can spend your life trading super low risk/reward trades that are so far OTM they never hit, and where would that get you? A million infinitesimal losses still integrates up to a loss. Sure, I can buy a 4-StDev OTM call and if SPY shoots up 5 StDev before expiry, I'll have a massive ROI. Is that a practical trading system? Not for most people. Maybe it is for you. Different strokes . . .

 

FYI, you could sell the 101 for more than 1.24 now. Free spread. Max value 200, investment 0.

 

I like to avoid micro-managing a position, but I would consider selling half if it was up well over 100%. My AAPL Oct24 100.00 Call position is still open and AAPL is at $101.27 after earnings, not the jump I expected.

 

Now buy weakness using feb as expiration instead of these dumbass earning gambles.

 

What weakness? The stock is like five percent higher than where he initiated the trade?

 

UPDATE

• AAPL at $102.76
• Sold to close 2 contracts AAPL Oct24 100.00 Calls at $3.11

I will post a summary of this trade on Friday after the Oct24 options expire.

 

Good job. Personally, I thought closing or partial at 2+ before EA was a good move, but you showed me wrong

 

OCT24 OPTION EXPIRY SUMMARY

The AAPL earnings trade was a flawless textbook example of a well planned trade. The 7-day chart below is an easy way to visualize the trade is it progressed.



AAPL 7-Day Chart from October 16 to October 24

Blue Dot - Thursday Oct 16 at 3:42 PM EST - Original post with AAPL earnings trade idea
Red Dot - Friday Oct 17 at 3:41 PM EST - Bought 2 contracts AAPL Oct24 100.00 Calls at $1.24
Green Dot - Tuesday Oct 21 at 9:32 AM EST - Sold to close 2 contracts AAPL Oct24 100.00 Calls at $3.11

• Debit: $248.00
• Credit: $622.00
• P/L: $374.00 (+150%) (commissions not included)

 

Profits are great, but you had a $105 target. You terminated your "flawless" trade well short of your target, and the underlying actually ground its way past $105. You left ~ $400 on the table. "Flawless".