Back in July with AAPL at 154 I posted a negative analysis looking for 120 for the stock. With AAPL now trading under 90, Adam Hewison of Market Club has just posted his negative analysis of AAPL, looking for 40-50:
Hi Allan, Just wanted to elicit your thoughts on how to apply leverage via options in trading the likes of AAPL and the Q's using the triangles.For eg, the Q's may typically give long term trend signals every 4-6 weeks, with intermediate counter-trend signals say every 2-4 weeks where you should be liquidating your current position. Then wait for the next short term confirming signal.
If you are in a trade for 2 - 3 weeks, it seems to me you should go out 3 months or so in time for an at-the-money option with about 50 delta, with a 50% management stop as you previously mentioned. Does that sound about right to you?
Did some back testing on my Nov 6 Q's short entry. Buying the 31 strike had about 128% returns for the Jan expiry and about the same for the March if sold today. There was a higher return for the Nov month, but I think that would be a riskier entry because the erosion would be far greater and if there was no intrinsic value gains, it would not be a pretty situation. Sorry for the long post, just thought I'd explain what I tried to uncover myself before seeking your views.
Kat, your logic is solid, but let me suggest you divide your money into halves and go with different months, using the nearer month as your "trading" vehicle, thus juicing up total returns when you include the further month.
Hi Paul, I just started taking the triangles out on their 30 day spin yesterday, so am absorbing all the stuff there.
However, just on the Q's signal that Allan posted here, I am up 14% on a non-leveraged basis since Nov 6th (can you imagine the options return on them right now?!). The Q's haven't given a counter-trend short term signal yet on the daily chart, so I am staying put in that trade.
The website is clean and has some superb material and help videos.
The only thing I need to get down to is my game plan ie use appropriate filters to come up with tradeable candidates. For that I am scouring through some of Allan's older posts for pointers and tips. For now, I am happy monitoring the Q's, APPL and some of my favourite stocks.
10 comments:
Allan:
Are you not a hard core MacIntosh user?
Did you know that AL GORE sits on the AAPL board?
In light of these facts, would you like to change your position and go bullish?
Sharon Leal
....goes AAPL, so goes the Q's. The QID etf could give you twice the bang for the buck, if you were so inclined. Thanks Allan.
Allan:
I've been following your blog for several months. One question:
Do you EVER make a mistake?
It seems like all of your picks are perfect!
Sharon Leal
Hi Allan,
Just wanted to elicit your thoughts on how to apply leverage via options in trading the likes of AAPL and the Q's using the triangles.For eg, the Q's may typically give long term trend signals every 4-6 weeks, with intermediate counter-trend signals say every 2-4 weeks where you should be liquidating your current position. Then wait for the next short term confirming signal.
If you are in a trade for 2 - 3 weeks, it seems to me you should go out 3 months or so in time for an at-the-money option with about 50 delta, with a 50% management stop as you previously mentioned. Does that sound about right to you?
Did some back testing on my Nov 6 Q's short entry. Buying the 31 strike had about 128% returns for the Jan expiry and about the same for the March if sold today. There was a higher return for the Nov month, but I think that would be a riskier entry because the erosion would be far greater and if there was no intrinsic value gains, it would not be a pretty situation. Sorry for the long post, just thought I'd explain what I tried to uncover myself before seeking your views.
Sharon, mistakes lay the groundwork for future success, they are to be respected as learned friends.
Kat, your logic is solid, but let me suggest you divide your money into halves and go with different months, using the nearer month as your "trading" vehicle, thus juicing up total returns when you include the further month.
Allan:
WOW! Then I have a WHOLE LOT more friends than I thought!
Sharon Leal
Kat can you share some of your thoughts on the triangles. Have they made you a better trader? More profitable?
thanks,
Paul
Hi Paul, I just started taking the triangles out on their 30 day spin yesterday, so am absorbing all the stuff there.
However, just on the Q's signal that Allan posted here, I am up 14% on a non-leveraged basis since Nov 6th (can you imagine the options return on them right now?!). The Q's haven't given a counter-trend short term signal yet on the daily chart, so I am staying put in that trade.
The website is clean and has some superb material and help videos.
The only thing I need to get down to is my game plan ie use appropriate filters to come up with tradeable candidates. For that I am scouring through some of Allan's older posts for pointers and tips. For now, I am happy monitoring the Q's, APPL and some of my favourite stocks.
Thank you Kat
Paul
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