Trading Apple

The Forbidden Fruit

4/8/2018

Before I discuss this week's trade of the week and outlook, I want to do a quick check on Urban Outfitters, (April 1 Trade of the week). We were looking to take out $37.48 and it did. $URBN made a high of $38.70 and the daily squeeze is just now firing long. I am still in this position to the long side.

On to this week outlook. I'm watching Apple $AAPL. My thoughts are as $AAPL goes so does the market. Why is that? Apple is heavily weighted in the Nasdaq ETF QQQ, the biggest holding in SPY and 15% of the Technology ETF XLK. Click the images below to see.

If $AAPL breaks the Darvas box on the daily time frame at $165 we can head lower. If you look at the weekly Darvas box you'll see that $165 was resistance in a prior box and $AAPL is in a weekly squeeze.

Apple current IV is 32% with and IV rank of 80%. At the current IV level we can determine what option strategy works best to play this to the downside. Want the IV Rank indicator? Just ask me in the King's Chat.

We have been discussing the pre-earnings strategy with Apple and the results are shown below buying 3 various deltas. This is empirical data that has been traded and tested, not something we pulled out our butt. I promise you this too, we're not buying deep in the money, high delta positions. If we wanted to do that, we'd buy the stock but we want the benefit of buying options cheap and let implied volatility help us make the options even juicier! The actual results are posted inside our Earnings room. The goal is to get Apple at a discount this week by buying it at new lows if the $165 level breaks.

What are my targets for Apple? What does that do the Nasdaq and S&P? What strategy to use based on this IV? See more in the members blog. To sign up for the members blog, CLICK HERE.