Silly Mistakes, Making Money and Christmas Eve’s Joy



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Dec 24 2007
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Christmas has been kind to Apple Inc. but definitely no Santa’s visit to Googleplex on the last remaining couple of trading hours before the happiest day of the year – Christmas 2007. Yeap, the stock markets will be close early on 24th Dec, Christmas Eve – three hours early for people to celebrate the holiday. Depending on your geographical location (longitude and latitude) the Xmas bells might have already rang.

As much as the joy of holiday (believe it or not I’ve been listening to Christmas songs non-stop since this morning) was on the air, I made the mistake of closing the wrong position. So, instead of Apple Inc.’s (Nasdaq: AAPL, stock) AAPL Jan 2008 165 Call Option, I accidently clicked on AAPL Apr 2008 180 Call Option without realizing it until it was filled, although both were in the profitable position *kick myself*. Yeah, you can laugh at me. Go on and laugh it loud “HO HO HO!”

There’s another thing that you might wanna laugh. See the chart down here? How many option traders out there would have bought at $184 level, watched it skyrocket to $196 level only to see the position plunged back to $180 level “without” taking any action? Was my timing right when I opened the position on 5th Dec 2007? Going by the chart – definitely! In fact it was good money but I screwed it, well, temporarily.
Apple Profit ChartIf you could remember, there was this period when technology stocks’ tumble due to the so-called sub-prime’s effect. Technology stocks were punished un-necessarily. That was the huge reversal cycle of Apple Inc.’s (and other tech-stocks) bullishness. It recovered from as low as $152 at one point to above $180. FinanceTwitter opened the position on 5th Dec – just comfortably above $184.

One of the reasons why I love trading Apple’s option again and again is the fact that once it was trading at the normal pace (not like the tumble’s mentioned), you tend to be able to understand its cycle well. If you look at the chart, you’ll notice how the minor support and resistance levels help you in making good money. The date 11th Dec was the day the mini pull-back occurred again, though this time it wasn’t as severe as the first round. My reason for holding back might sounds silly but I believed the $200 level should be within reach.

Apple profitOkay, here’s the magic number for Apple Inc. Since its huge gap-up on 23th Oct 2007, the stock has been registering a new high of $4 a share on its next subsequent stock price. So on 6th Nov 2007, you’ve a new high of $192. Then on 11th Dec 2007, you’ve a new high of $196 and the time duration is getting closer for the next new high. And today, on Christmas Eve, you’ve watching Merry Christmas ChickApple Inc.’s stock price trying to test the $200 level. Just look at the intraday’s wave of new high and the volume. It’s a sight you can’t get everyday – simply magnificent.

But this time I’m not going to wait and see it plunges again, the same way it did previously, without taking some money off the table. Only this time I closed the wrong expiration Call option. Heck, I’ll just wait for it to make its traditional pullback before open new position again. Don’t you just love cyclic stocks that are predictable? Okay you can call me names again on the above’s silliness; I won’t curse you no matter what because it’s Christmas and to be able to make money on Christmas Eve is a double happiness. So Merry Christmas to all the traders out there. Cheers!!!

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Comments

Congratulations on some nice trading.

You’ve said that AAPL is a cyclic stock that is predictable. I’m curious to how well you will predict this stock for the next 30 days:

1) Are we going to dip from here and how low will it go before it bounces back up?

2) What price do you think the stock will be at on the close of monday Jan 14 (day before Macworld expo).?

3) What price do you think the stock will be at on the close of Jan 23 (day after earnings)?

I’m not trying to put you on the spot, but I am curious to see if you’ll take the challenge and how well you’ll do.

Best regards,
Mike

hello mike,

i mentioned AAPL is a cyclic stock because it comes very close to the law of “whatever goes up will comes down” and vice-versa within “medium-term” … definitely i’m not God who can predict it’s next reaction but suffice to make some pocket money, at least to me … ok, let’s the game begin …

1) i think it will need to consolidate before going above $200 … i’m not sure how long will it hibernate but it shouldn’t be more than a month, so you need to have time value on your side if you’re trading option …

2) without any external shocks, i would think AAPL will be, hopefully, above $200 a share before the bog-day (you mentioned the magic word – macworld) …

3) this depends very much on the outcome from the macworld … sentiments play and expectation changes the moment steve jobs mention things – favorable / unfavorable … you’re asking something about trading based on earnings which is a risky business but could be very rewarding …

from now till jan 23 that’s about a month away and lots of thing can happen … for example in nov itself the stock swing from $190 to $152 – that’s about 20% plunge from the high and up from it’s low … anyway i would long the stock before the earning …

again i’m not fortune-teller mike but in business of trading, especially option, the stock price pattern-volume and news play vital role in decision making … that’s how you scalp to make some money here and there …

cheers …

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