Update on AAPL

As mentioned in my previous post, I bought a put diagonal believing AAPL will decline in the coming days. This post is an update as to what happened.

After I bought the put diagonal, AAPL released earnings the next day. This had two effects:
1) I got stopped out of my long puts around the red rectangle for a pretty significant loss on the long put side.
2) The drop in volatility, however, made me pretty good profits on the short put side.

At that point I was expecting AAPL to continue to rise and so I kept the short puts and expected them to expire OTM, which would have resulted in ~80% profit.

But, AAPL quickly reversed and after consolidating a little bit at the support levels I had drawn, it continued to fall. I did buy puts again around the green rectangle, so essentially I am once again in a put diagonal.

Looking forward, the 190 support is holding up pretty well and AAPL is currently unable to break the 196 resistance I have drawn. However, I am seeing an ascending triangle which is generally a bullish pattern. This could mean that if AAPL breaks the 196 resistance, any downtrend would be negated. I would then be, once again, forced to sell my long puts.

A counter argument to the above is that the volume is quite low and falling. Also, on the longer time horizon charts (monthly and weekly), the Oscillators are VERY negative. On the weekly, the momentum is the lowest it has been in months and on the monthly chart, the oscillator has made the first bearish reversal since 2007.

Finally, a couple of companies upgraded AAPL to buy this week. Normally this would mean significant gains for any stock, but the lack of conviction in AAPL's upward movement definitely bodes poorly for the stock.

-wown
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