Happy June!
This week I'll be sharing a trade in Apple that has been on since February and needed 3 different “rescue” trades to come out on the other side with a profit.
Of course, this story has a happy ending with $187 in realized profit. It just took a while.
This week:
$187 profit in Apple (AAPL)
$187 profit in AAPL
Way back in the middle of February, I sold a $175 cash-secured put in AAPL expiring on Mar 28 and collected an initial credit of $152.
Unfortunately, just 6 days before the option was going to expire, the DOJ decided to initiate a lawsuit against AAPL, sending the stock below $175. If I continued to hold the position, I would risk getting assigned 100 shares of AAPL at $175.
To solve this, I rolled the position out to Apr 26 for an additional credit of $165.
Unfortunately this was not to be the only roll for the trade.
I had to perform one more roll April for another $205, and I converted the whole trade into a jade lizard for another $165.
(I won't go too much into the jade lizard strategy, although I teach it in my course, but you can find out more about it here).
Come 5 days before expiry, it was time to decide what to do, so I laid out the following plan in my private community:
One thing you might notice in all my newsletters is that I never say “I'm bullish on this stock so I'm going to do this” or “I'm bearish so I'll do that”.
Instead it's phrased as potential outcomes, like you see in the screenshot above. If the stock does this, I'll do this. If the stock does that, I'll do that.
I can't speak for anyone but for me, removing that directional bias helps me to stick to the strategy, instead of being thrown off course by any kind of market noise.
Eventually AAPL did rally hard and I closed the entire trade for a realized profit of $187.
So in this particular trade, I actually left quite a bit of money on the table by converting the trade into a jade lizard. If I hadn't done that, the profit would have been something like $500 instead.
But at the time, after a few months of rolling the trade, the best course of action would be to continue to sell more premium, which is what I did.
If however, AAPL had dipped further, then one might say transforming it to a jade lizard was a good idea. But that's engaging in “resulting” - where the outcome of a decision influences whether the decision was a “good” or “bad” one to begin with.
For me, I stuck to the strategy and still got out ahead with a profit. I just move on to the next trade.
As always, you can get updates for all my trades (and weekly portfolio updates) within my public portfolio by joining my Bread Crumb subscription.
It's $49/month so this one winning trade in AAPL would have covered all costs (and more) for the month.
Closing thoughts
May tends to be a seasonally weak month, but with the massive rally on Friday, we saw none of that weakness.
I've been saying this for a while now, but there hasn't been much to meaningfully move the market. There's lots of “vibes” around AI and/or interest rates, but until I see something concrete, I'm not ready to take on too many positions just yet.
Have a good weekend!
This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.