Trade Breakdown: AAPL

Strategy by Charlie Bathgate

Trade Breakdown: AAPL


The market has taken us for a wild ride for the past month as the SPY chopped back and forth from $255 to $270.

There was no real direction during this turbulent earnings season, and every push higher was met with decent selling pressure and buyers fading away.

On May 3rd, the market tanked below $260 in the early hours of trading. Then, during the last two hours of the day, the SPY completely switched directions as it rallied up from the lows and closed over $263.

Today (May 4th), we saw continued strength throughout all sectors of the market as the SPY continued its push off the prior day’s lows.

There was bullish action everywhere, but the play of the day goes to AAPL.

AAPL beat the street as it reported $2.73 earnings per share versus an expected $2.67 EPS. We saw a slew of AAPL option call sweepers purchased before the bell on Tuesday, and on Wednesday, May 2nd a $1.2M block of calls were purchased right after the first hour of trading.

To add fuel to the fire, Warren Buffett announced that he bought a massive 75 million shares in the company, which pushed the stock up almost 4%.

We saw sweeper after sweeper hit the tape as it steamrolled past $180. At 10:14 am, 150K shares appeared on the offer at $182, and the stock broke through that level as it pushed towards the HOD at $184.25. Our traders in the Steamroom were able to capitalize on the bullish activity surrounding this tech giant:

Silverfin, a beast of a trader whose been with us since the inception of Sang Lucci, anticipated positive continuation in the name after earnings.

On Wednesday May 2nd, he purchased the May 11 177.50 calls at $1.65 after the first 90 minutes of the trading session. The stock did not waver during the overall market pullback, and a few minutes after the opening bell on Friday he sold half his position at $3.15. He also had AAPL calls he purchased at $2.65 and sold approximately 15 minutes into the trading session at $4. These two trades gave him a profit of 51% and 91%!

MJ had the same idea with AAPL as she purchased the May 11 180 calls at $0.93 on Wednesday around 1:30pm. She held throughout the tight period of consolidation and sold her position today at $2.11.

That’s a gain of 127% in two days’ time.

There was a slew of circumstances that created this trading opportunity. The SPY bounced off of its 260 support level and reversed to the upside, AAPL beat its Q2 earnings estimate, a $1.2M block of calls got purchased during consolidation while the market was weak, the stock’s tape printed repeated call sweeps and refreshing orders, and Warren Buffet’s endorsement boosted overall sentiment in the name itself. The two examples above are just a few of the traders in the Steamroom that took profits on this move with the guidance of Lucci, Wall St. Jesus, and the rest of the Steamroom community!