Apple Bites Back

So for better or worse the main theme of today was AAPL. With the WWDC today and announcement of the 3G iphone and many other critical business components I felt like the volatility could be exploited.

I entered the trade when I saw it break out of a range to the upside above 182, in general my bias was long, I thought today would be an up day overall after the speech was done. So with that break I entered into 25 contracts of the June 195's. The delta was approximately .25, I felt with good news the stock could easily be propelled up to the old resistance level of 190 and if it broke we could see 192-195. Initially the trade was doing fine, the option value increased .20 giving me a nice cushion, the stock came back down and found support at the 182 level that I had entered. This held for a while then started to break down as the speech approached. I had a limit sell order on the long side but not on the down side, however I wanted my downside risk to still only be 2%, in this case that meant .2o of loss. I entered at 2.40 so that would be an exit of 2.20.

The stock essentially plummeted down to 175 for no reason just as the speech was starting and I was unable to do anything as I was going to class. At that point I was faced with a decision, do I sell out, average down or do nothing. My inclination was to average down since I knew this was likely unsustainable making a break even only require only half the movement back or even better a profit possible after a large initial loss. I decided to do nothing because I didn't want to compound my loss. I decided to wait it out and ended up setting a sell limit at 2.20 equaling my desired 2% because at that point it was looking like I would be lucky to get out with that small loss. At one point it got back to my 2.40 price but I had already been filled, of course I never could have known it would get there.

In the end, I got filled and was actually lucky to get out with that loss. Had I continued to hold till the end of the day I would have lost 10% of my account instead of only 2%. Remember we have to survive to trade another day so while I am partially upset I didn't take advantage of the initial exaggerated weakness in the stock, it would have likely been more wreckless to average down and holding would have put me in a weaker position to trade with in the future.

The nasdaq was down significantly today, which was great because all my tickers were 4 letters and calls(stupid). My hope was to get weak stocks to rally to buy puts, which unfortunately did not happen. It is stupid to look back and say "should have" but holding all my positions from last week to today would have been the best move yet and I would have had another very profitable day. The reality is that I didn't have them so I must say "oh well" move on and look to balance myself and get back the losses of today.