Looking for Weakness
Entering a week with a heavy cash position can be risky. Then again, there was ample opportunity to jump in this morning since nothing negative developed over the weekend. Also, those who were short from Friday would actually prefer cash this morning, so all is not lost. This is the type of morning where I want to look for underperformers and weakness. I am certain we will hear about the sudden Monday trend change as it seems like forever since we have had a strong Monday; however, I don't think a later-day fade is out of the question.
Apple (AAPL) looks to be establishing a $666 to $677 range with $661 and $682 as the overshoot support and resistance. The chart is starting to look a bit better here and over $677 puts that $682 into play with $686 as a possibility. But after last week's action I am focused more on the monthly options rather than the weekly options. I shorted the October 19 $620-$605 put spread to buy October 19 $685-$705-$715 skip-strike call butterflies in a short 4 bullish put spreads by long 1 skip strike butterfly. This was done for no net cost and is a clear bullish play. The company will release earnings after expiration, so the only possible event right now seems to be any introduction of a new product such as the iPad mini. There is about 8% downside protection built in here, although a short term stock drop will show as a loss on paper. If $661 fails to hold, especially this week, then I may simply adjust the bullish put spread into a bearish butterfly....182 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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