That's right, the newest chart sensation, the "spitting cobra" has re-formed on our Big Chart and it was quite an accurate sell signal on May 31st, as well as Sept 20th but we jumped the gun last Thursday, although we did catch a small ride down before the reversal.
Reversal is just what we have, pre-market, as the major indexes attempt to reverse yesterday's losses BUT, interestingly, the Russell is still in the red, simply unable to take back that 1,100 mark.
That's why TZA was our favorite short last Thursday and the spread we discussed in the morning post was the 40 Dec $20/24 bull call spread at .90 ($3,600), selling the 2016 AAPL $400 puts fro $41.20 ($4,120) for a net credit of $520.
The Dec $20/24 bull call spreads are now $1.20 ($4,800) and the short AAPL 2016 $400 puts are now $39.40 ($3,940) for net $860 and a $1,380 profit already (265%). How's that for a good hedge – the RUT is only down 10 points since we made it! Come on folks, this is just the stuff we give away for free…
Meanwhile, speaking of AAPL, in our Member Chat room on Monday morning, we played a more complicated spread (this is the whole point of joining PSW, we teach you how to make these trades) with AAPL and my trade idea was a broken butterfly ahead of earnings based on the fundamental principle we teach at PSW, which is: BE THE HOUSE, Not the Gambler and SELL risk premium to others. Ahead of AAPL earnings, the risk premiums were through the roof and we took full advantage with:
Trade Details Cost Basis Expected Value
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