Three Friday Trades

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An AAPL expiration graph

I bought back the short side of a near-term 540 calendar call spread when Apple’s stock fell with the market on Friday. I sold another nearer the money and closed a couple hours later. The two short calls have nearly paid for the long call at 540.  AAPL’s consolidation at 530 has indicated to me that big players are accumulating stock. I like to be long Apple here, especially when the cost basis of the call is very low and when the volatility of AAPL will surely increase into earnings.

ImageCopper is at a relative low point and appears to be in consolidation. I bought a deep, in-the-money call (which is not a future’s contract– insofar as it doesn’t influence the price of the underlying) with September expiration. Since it is so deep in the money, its intrinsic value is very high; time decay is not as big a problem as the more at-the-money or out-of-the-money options. If copper continues to move down, I can sell options against the position and reduce the cost basis of the position. The weakness of this trade: I don’t really know what the world demand for the industrial metal will be over the next six months. But if I were in the copper business, it seems like a good time to begin accumulating.

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A RSX expiration graph

The market continues to feel nervous, no doubt this is in part due to the Ukrainian, EU, Russian, and American entanglement. A straddle seemed like a good choice of a trade. If the situation is solved to the satisfaction of global markets, the Russian market will run up quickly. If not, the volatility will probably remain high and the ETF that tracks this market will trend lower. I have both near-term and mid-term straddles in this spread.

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