My strategy from yesterday almost worked as planned. The share price of AAPL dropped today, which is what I was planning for, but I pulled the trigger on my order after the low of the morning and before the afternoon low. Due to AAPL’s $0.73 ex-dividend date today, the stock adjusted post-payout, i.e. pre-market. After a quick drop this morning, AAPL came off its lows and I jumped the gun thinking the price drop was done.
While AAPL was trading at $208.58, I sold one AAPL October $205 naked put for $4.75 and received $474.33 after paying $0.67 in commission. That was a few hours ago. Now AAPL is trading at $206.92 and the bid/ask on my strike is $5.35/5.45. I’m not worried about losing money on this trade, but I’ll admit it’s annoying to trade without patience and miss out on an extra $65.
I could see AAPL coming down to fill the gap from August 1 to around $97.50, which happens to be around its 20-day moving average right now. If it does fall that deep, I think it’ll rebound quickly. A decline like that would be more than a 5% drop from its intraday high yesterday and unless something fundamental changes, the stock should recover easily from there.
I don’t actually think AAPL will fall that much yet. Maybe the intraday low from two days ago would be better support. That was $204.54, 2.5% below yesterday’s peak. The 10-day moving average is ascending past $203.70 today at a steep incline. I remain a believer in Apple’s story as a company and believe the valuation is fair. So, a harder dip and an option assignment won’t scare me much. My GS position is starting to scare me some, but I’ll keep selling covered calls and get most of my cash back eventually, maybe.