AAPL crashed down breaking the main support around $92 this morning. As a result of this ‘mini crash’, my existing AAPL position (Bull Put Credit Spread) was challenged! There are few ways to repair this position. After considering all factors, I have chosen the most aggressive method, which is to close my sold leg (Refer trade highlighted in green in the screenshot below) and let my bought leg run. I subsequently close my bought leg (Refer the first two trades highlighted in red in the screenshot below).
Reason of this method:
- Tight credit spread, only $2 wide (Strike $92 – Strike $90).
- AAPL breaks strong support and the overall market is bearish at the point of decision making.
As options DTE is short (8days), the bought leg needs to be closed within a day or two. I closed the two trades separately @ $1.20 and $1.30.
Profit = $55*2units – $157*2units + $120*1unit + $130*1unit = $46
Summary: I am wrong to assume the support around $92 will hold. However, I am still able to turn a losing trade into a winning trade. This is the beauty of trading options. If I were to long/buy the stock above $92, my stop loss at around $92 should have been triggered. There is no 2nd chance for me to salvage my position.
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