Last Friday we layed down a Bear Call Spread on Apple. Now, a Bear Call Spread is desnigned to make money when the stock is going down. The rule of thumb is to execute an option strategy like this when the as the stock is moving in a bearish pattern. AAPL is definitely in a bullish pattern.
But, we like practicing trading the stocks we watch in both directions when possible for the purpose of constantly being able to make money nomatter which way the stock is moving.
On this trade we sold the 340 weekly calls and turned around and bought the 350 calls. This is a credit trade, so we recieved our money up front.
We sold the 340's at $22 a contract. Then we bought the 350's at $15 per contract. This gives us a $7 credit spread per contract. How much money is that? Ifyou sell 100 contracts, it is $700 and if you sell 1000 contracts, it is $7000.
Since we are presently trading at 316.80 our trade should expire Friday with no problem. These types of profits are good for such a short term trade.
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