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July 22, 2012 / redman59

Again Traders Are Left With Questions

Today was suppose to be the big day and we were either going to shoot up or drop down but either way volatility seemed to be expected by many. Well the FOMC released their news and Bernanke did his thing that basically ended us with a flat market. All I could do was laugh as last night @Rhino_Cap wrote a post in which I commented “…now that everyone including me is expecting volatility watch the market do nothing, confusing folks again with the “what do I do now?”” While we did have some intraday volatility the market basically was flat. Those that shorted the initial drop got their faces ripped off with a 16.75pt run in the $ES_F. Then those that did the panic buy (fear of missing out) on the run up almost see those lows again with reversion to the mean at basically a flat day. A daytraders delight but those that are looking to get in the market and bought on the run probably were not comfortable with the action. I know the feeling because I was one of those guys as I made a trade in AAPL via weekly calls.

I chose to trade the AAPL June Weekly 580 Calls.

It was a stock that I was looking to get into as stated in previous posts but more for a swing and not a daytrade. After the initial drop after the FOMC minutes I did get in the stock after the initial drop and move higher but my stance changed. This no longer turned into a stock that I was willing to hold overnight because I believed that the news pretty much sucked and if we see a gap down tomorrow, this is one stock that can make a nice point gap and move violently against a trader. I chose the Weekly options for the leverage (preferred when daytrading AAPL) and knowing that I was going to exit the same day as with only 2 days until expiration there is big theta decay with AAPL options and holding them overnight is not a good decision while hoping they don’t open down and then have the position be crushed. I was definitely pissed to see it continue to run and see the option go another +$100 but the selling came and overall it seems like whenever I get in this stock I can’t wait to get out as I believe it alone has ruined traders careers.

5min AAPL Chart

Stated before the FOMC announcement in a post, I cut half of my SPY puts for slight gain and then at the end of the day I put on a short bias position in KO. Staying light here right now and see how this news is digested.

Current account with allocation (rounded to tenth):

Cash @ 87.2%

Long bias @ 6.6%:
-NKE Bull Put Spread @ 6.6%

Short bias @ 6.2%:
-SPY Single Put @ 2.3%
-KO Single Put @ 3.9%

“you create your own reality and leave mine to me” -Bad Religion

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