The past several days with stocks pulling back, many investors are watching their trades anxiously. Today an investor emailed regarding his problems with his Apple Stock Credit Put Spreads. Let’s look first at his positions and then see what can be done to assist this losing credit put spread.
Here are the credit put spread positions in Apple Stock he set up:
Bought June 9 2014 – 25 Apple Stock June 27 expiry $85.71 put for .23 cents = $575.00 – cost for the long puts
Sold June 10 2014 – 25 Apple Stock June 27 expiry $90.71 put for .57 cents = $1425.00 – income earned on short puts
Income before commissions = .34 cents X 25 contracts = $850.00
Capital At Risk: $12,500.00
Trade Potential 6.8%
Teddi, I am down 46%… what are my options? I have a lot of cash to roll if need – $103,000.00. 136k in option buying power. Thanks
Often it is not a matter of applying more cash to the trade but understanding first what went wrong and then correcting the error for the next trade. Then fix the trade that is failing. Let’s understand how to approach this problem by starting by learning the errors made so they are not repeated. There were 5 main errors in this trade which set the trade up for potential problems. By correcting these errors on future trades this will go a long way to improving the odds of a winning trade.
This article on handling failing credit put spreads on Apple Stock is 2800 words in length and will require 8 pages if printed. FullyInformed USA Members can can login directly through this link or USA Members can sign in to the full members site here. Non-members can join here.
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.