Once again, I was wrong about AAPL. Well, mostly wrong. I was right that AAPL was going to bounce some in the morning, but I thought it would last hours, not minutes. When I saw the stock moving higher, I started to get my orders ready for when it reached a good dead cat bounce pea, but within five minutes of opening, AAPL was below yesterday’s close. I decided to dump my last AAPL exposure and even had to chase the price a little since it was falling so fast. The stock bounced some after I exited, but it wouldn’t have made much of a difference. The good news is that I got out before the real selling started and took it close to $535.
While AAPL was trading at $553.70, I bought to close five AAPL November $560 puts for $14.49 and sold five AAPL November $555 puts for $11.64. I paid $1,429.76 including $4.76 in commissions. That gave me a realized loss for this series of trades of $1,615.09, a lot less than it could’ve been, but a lot more than I should’ve let it be. I shouldn’t have jumped back in after the first loss on my AAPL trade until the stock showed some real support and a reversal of the slide.
I consider this my first really stupid trade of the year and it might end my streak of months with realized gains. That’s fine; it’s more of something fun to track. I go into each year expecting at least two months that I’ll lose in and possibly three. If the market turns soon enough, I might be able to salvage this month still with a quick bullish trade. I’m not banking on that with the fiscal cliff drawing closer and closer without any hint of a resolution coming. Negativity has overtaken the market and I’m not going to jump in the way of it. My TLT call spread is still out of the money, but by less each day. I’m going to let it run again and expect the short call to be assigned at the end of next week if I don’t close it out. I’d like to run the same trade I did last time with TLT and go short the ETF, possibly sell covered puts on it and then dump it when it goes below my strike. This AAPL trade wiped out some of my gains from the last TLT trade, so I could use the same pattern to work again for me.