Something didn't want Apple to close above $500

Max Pain?

From Investopedia:

Max pain, or the max pain price, is the strike price with the most open contract puts and calls and the price at which the stock would cause financial losses for the largest number of option holders at expiration

My take: Missed my chance to take a snapshot of this Friday's trades in puts and calls. Here are last Friday's, when Apple also closed less that a dollar below $500.

6 Comments

  1. Michael Goldfeder said:
    It was up around $4.00 and some change with about 12 minutes left before the close. When I looked at the close after the bell, I noticed that it cratered for no reason other than to hit a strike price just below $500.00.

    Monday ought to be interesting with the split shares trading for the first time.

    1
    August 29, 2020
  2. Gregg Thurman said:
    Something didn’t want Apple to close above $500

    Could it be something as sinister as the market has generally settled on $500 as AAPL’s current value, and profit taking occured above that print?

    I don’t care. I held two options positions going into Friday’s Close: $480 – $485 Call Spreads and $492.50 – $495 Call Spreads (I didn’t start buying the latter until AAPL was trading above $505). Both paid off at maximum value yielding a blended ROI for the week of 42.5%.

    As an aside, my goal is to buy at Monday’s low of the day. I failed. The same thing happened with my second position.

    Buying or selling: in-the-money Spreads offer high yields with very good risk management.

    2
    August 29, 2020
    • Paul Brindze said:
      @Gregg.

      Just my opinion, but I would wait till Tuesday this week.

      I think/hope Monday may be crazy up, with sell-off Tuesday or maybe Weds. (planning on selling a bit on Monday, for later re-entry).

      If considering taking this advice, remember, in considering its worth, how much you paid me for it (not counting PED subscription).

      3
      August 29, 2020
      • Gregg Thurman said:
        Thanks Paul. I appreciate it. Buying on Monday is part of my strategy, but not cast in stone. I agree with your assessment that this Monday (maybe the entire week), what with it being the first trading day post split, should probably be avoided.

        1
        August 29, 2020
  3. David Drinkwater said:
    I honestly think this could be relatively more mechanical and more innocent (I’m sorry I didn’t hurry to project this sooner):

    I do think a lot of this could be “algorithmic” and very quickly executed based on requests such as:

    “If AAPL is at over $500 on Friday before the stock split, SELL.” I don’t think that that is technically a STOP-LOSS if someone brought below $500, or $400, or $300..

    There could, of course, be STOP-LOSS orders to that effect for folks who bought at the peak.

    I have to assume that there are similar mechanisms for short sellers.

    I think the fact of a Friday or an Options Due Date or an impending Split could all generate such machinations.

    I’m eager for the Split-Adjusted $130 shares Philip referenced on Sunday.

    0
    August 31, 2020

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