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Weekly

02/20/17

 

80% Probability Range - Moved
96% Probability Range - Moved

 

 

 

 

[Added Amazon tab to help support the site]  

04/27/14 - Using a calculation for the ranges this week instead of open interest as there are too many option trades that were earnings only plays. 

 

11/20/13 - $510 will become the highest put OI by Friday. 

 

10/19/13 - Probabilities not tracked due to event week. I wouldn't be concerned with the $500 strike as getting over it is the most important and difficult. There is a high probability AAPL moves higher once it passed the $500 strike. 

 

07/21/13 - Probabilities not tracked due to event/earnings.  

 

06/26/13 - Arrow over the highest OI. 80% probability staying the same as it was from Sunday.  

 

06/09/13 -  No probabilities as of now due to WWDC event. 

 

06/06/13 (pm) Moved the put arrow over the highest OI strike but leaving the $435 range steady as it was there since Sunday night. 

 

04/30/12 - The OI keeps moving up as Apple moves up.  This is a bullish sign. I'm going to leave the $450 96% range as is (since Sunday) The buyback/cash plans have put a bottom in the stock. Apple is now in the process of building a new trading range. 

 

04/21/13 - Apple's earnings are on Tuesday. Open Interest probability is not tracked due to event.  

 

03/28/13 - This is the weekend real money is expecting some news. Unless AAPL announces cash plans this weekend, all those div speculators are about to get crushed.  

 

03/19/13 (pm) Nice to see the call side move up for a change (the $460's were 9K today). The call strikes have been coming down for 5 months straight, so this is a nice change.  

 

02/07/13 (pm) - Aapl_Pain has my take in neutral, meaning no opinion/play. I am leaving the arrow on the $460 strike for transparency only. $460 has been rejected all week, including today. A grey swan swooped in today, doing longs a favor, possibly getting us out of this options purgatory. Today you had an unforeseen event. Tomorrow's close will heavily depend on natural buyers and sellers. (a willing buyer/seller only exists in the futures market) 

 

02/06/13 (pm) - The reason you see the $400-$445 calls flatlined is due to the dividend today. All those calls were exercised. -- Leaving $440 puts as the 80% range, if sold $440's, no reason to roll up.  

 

02/04/13 (pm) - I was watching the Super Bowl last night when updating the site. I'm not sure why I didn't allow for very much volatility on the 98% range. Backed off to a more appropriate strike. 

 

01/20/13Due to event (Apple's earnings), probabilities are not tracked. 

 

01/01/13 -   Probabilities will be brought back next week.

 

 

12/09/12 - Due to the fiscal cliff and tax selling, I would not recommend selling weekly credit spreads. Apple has become excessively volatile as if events are taking place. Using OI becomes less reliable when events or excessive volatility appear. Until the fiscal cliff is resolved or the new year comes, I will not be tracking probabilities. I will still show the ranges, but they do not carry any probabilities.

 

12/07/12 - (am) Definitely not a normal OI graph. -- Due to NFP numbers, I would keep using the $590 call OI from earlier this week. No reason to use the $560 just for 1 day. If sold a call spread or covered call, take your gain and let expire worthless.

 

12/05/12 (pm) In no way can options slow pure liquidation. Options are no match for anomalies or overwhelming buying or selling. Today you had tax selling part deux as AAPL is still up 33% YTD, mixed with margin calls, and the street finally discovering Apple will keep its cash in the stock. I am leaving the 98% put range be for transparency. I'm not sure if AAPL will close above it or not. If you are interested in starting a Cr put spread, I'd look to the $500 or $510 strike. -- In my opinion there shouldn't be any angst if you have an investment in AAPL. The reason is, you know why the stock is selling off. It's market mechanics, not an actual Apple concern. Once the mechanical selling is done, the stock will rebound to a somewhat fair market value.

 

12/04/12 - How to trade Aapl_pain style? High probability; buy or sell near/at the highest put/call OI. Want even higher probability? You only buy/sell when AAPL breaches and comes back thru. Example: If AAPL dropped to $565 tomorrow, you don't buy until it breaks thru $570 going to the upside.

 

11/22/12 - See 11/19/12 note -- This is a rare event to have the puts build up. I'm not sure if the $500's were bot or sold but it doesn't matter (will find out). If they were sold it wouldn't be retail money but commercial wanting to get long AAPL. There is only half a day left until these options expire and this pattern goes away.  That's ok, the main takeaway is we just saw a huge sentiment change in the options.

 

11/21/12 (am) As a bull, the current put bias is a great thing to see.  

 

11/19/12 (pm) - The put side never really had a big build up during this latest sell-off.  I was saying last week, retailers along with everyone else had been selling calls. I would say this is the reason we did not see a build in puts like the past. I had mentioned this can actually be bullish, which brings me to my next  observation. I think last/this week setup a "frames"  type situation without the put build up for the aforementioned reason and calls overshot to the downside. Due to this situation I wouldn't give the $550 calls a lot of weight, but try to move out towards the $580 area in anticipation of a change. If the bulk of $550's were initiated STO covered calls, they will not cause selling pressure like you are used to seeing. This is why I do not have the 80% range on the highest call OI. If you like to use the highest OI at all times,you know where they stand.

 

11/19/12 (am) I would wait until tonight and reassess the 98% call side.

 

I show 2 probability ranges, 80% and 98%. My take is on the right hand side. If it’s in green I think it will hold, if red I wouldn’t make a risk trade on that strike. This is just personal opinion to give people my thoughts. The 80% probability range uses the highest OI and the 98% goes 1 strike OTM or more. *Note: I always recommend using the 98% range or better for risk trades.

 

General - This is an OI/Max Pain graph. It uses open interest (OI) to determine a max pain range. The arrow on the put side is for the “no lower than” price, the arrow on the calls is the “no higher than” price. Using an OI/Max Pain strategy helps to determine where AAPL will NOT be. An OI graph has many uses; use it to sell options, buy/sell points or just plain ease your mind. Using an exact Max Pain strike is not all that accurate, using a range is. This is the reason you will not find an exact strike figure on this site.

  • top_tier

    Travis, I’ve learned much reading your analysis on open interest and max pain etc. and am wondering if you might shed some light on an observation of mine. I’ve had my eyes on 6 month out contracts and noticed during Feb 7th trade session that several strikes in the ranges I’m looking at had volume amounting to several thousand shares on the call side that showed up as gains in open interest. Is something like this just statistical noise from your experience or worth taking note of? Thanks if you can respond.

    • If the calls are way OTM, could be 1 of the banks AAPL is doing their buyback with and they are using options to lock in their prices for the stock.

      • top_tier

        Yes, they were way OTM, July 550 and 560 and Oct 595 and 600s. Appreciate the feedback very much.

  • Louis Wan

    Hey Travis, can you explain why last Friday’s closing price was over your 80% of 460? There was no volume and the OI at 465 was like a cliff. Cheers.

    • Just no sellers of AAPL stock. All those calls when closing will cause a bunch of stock to be offered for sale. Normally this will cause sell bias due to normal stock for sale plus this additional options amount for sale. If there is no bias or sell off = buyers are sitting there buying up any and all stock for sale. Who knows, maybe Apple was buying too.

  • laskuta

    can you pls post apr 26th weekly chart..

  • Cathie

    When will aapl’s ‘deferred revenue’ show up and how much is it? Thanks

    • It’s always present. It’s amortized over 24 months (48 for mac). So it is always flowing back in, slowly.

  • marine1290

    How will the new mini options effect tracking Max Pain chart???

  • Roger

    Wouldn’t mini options affect regular options volume?

    • It’s not going to make a dent. Too small of contracts.

  • Pete

    Travis, you are being very quiet. Have you lost interest or are you just stunned likek the rest of us?

    • No, I’ve just taken to twitter/stocktwits mainly. For comments.

  • Jessica

    ok what now? Was it stupid for me to buy a ton of 460 and 465 calls with fridays expirations?

    • I imagine $440 puts become highest put OI and call OI keeps holding the stock down. Same story. Hasn’t changed since options became popular to retail investors. The more calls people trade/leave open, the more downside pressure there will be when stock hits that strike.

      • Vitalogy80

        So you figure we’ll be pinned at $440 this week?

        • If wanted my take on an exact (low probability) close I’d say $450.

  • Gupta

    It would be good if you show historical data of pain versus actual closing price

  • zcap78

    Do you think the put side will be enough to hold aapl up this week (i.e. above 430)?

  • please use a 2D graph

  • Thanx

    “After that DR will kick in smoothing out earnings and take margins higher on top of cost curve coming in” When will deferred revenue show up and why will it take margins higher? I mean they apparently had deferred revenue from the previous period as well so what makes it different this time around. Also, what will you do with the Feb put spread?

    • Because they sold 72M iOs devices this qtr. Those will start to trickle in. GM% won’t ramp to 47%, but Wall St will start to model say <36%, yet they will head back up to 40% into June+. — Will hold on to those puts, they were from many rolls back.

  • Jeff

    “$AMZN usually trades ~1.4 put/call & $AAPL trades 0.60 or so. $AMZN is coming down over past few days. $AAPL not at all.” Travis, indeed – i miss the huge put wall in AAPL in any of the near of distal months. Summed Call OI still *much* higher. More selling ahead? How quickly can P/C change? Days? Weeks? DId you track P/C in the past? If so, what does the current value predict for the direction of the stock? Thanx.

  • Sam Avelton

    Am i correct in assuming that it will close somewhere between 450-470?

    • No probabilities this week due to event. Events cause excessive volatility.

  • Gray Drake

    ,Travis

    I have been selling the 20 delta calls on Thurs or Fri each week for about $5 against my Jun long call that is under water. This has worked out, but it is frequently more risky than your recommendation.

    Now my question, because I am using the 20 delta as an entry, is it rational that I could enter a trade that is a lower strike than your recommendation, with roughly equivalent risk because there is less than 2 days to exp. Today for example when AAPL was trading for 503 about noon today, I sold the 545, for 5.45

    Drake

    • Graydrake

      Sorry, error. Must not be weekly options this week, I need to confirm. I automatically entered the next weekly and it was for next week, not this week. Can you explain when there are weeklies and when there are not?

      Drake

      • Weeklies are available every week. The 3rd Friday expiry is a standard monthly. This is a standard monthly this week.

  • Graydrake

    I have JUN long calls on aapl, against which I was successfully selling short calls for a couple of months and doing some day trading. My longs are down significantly, as you might expect. Selling short calls against them offers some near term risk, if there is a big run up. Any thoughts on how to play this type of position?
    drake

    • I would use Jan’15 DTIM (deep as you can buy) and then sell OTM calls against them. This way there is no risk of selling the calls. Just caps your gain is all.

  • AttorneyGeneralNuisance

    No updates for weeks………. great!

    • The post from 12/09/12 is still in play. Until either one of those things come, there will be no updates or trading of AAPL probabilities.

  • Bradelunger

    Hedge funds just told Travis today, “we like to trade our cunt AAPL oppa gungnam style!”

  • Graydrake

    Travis, I heard the same story on two sites yesterday, that while AAPL is strong fundamentally, it is technically extremely weak at the moment. The long turn ups in 2012 and subsequent patterns have removed most of the support above the 400’s.

    While I feel we will not go over the cliff, I do think there is a real probability that this issue will not get resolved until very late in the year. It seems the cliff risk offers the potential justification for the market to make one final correction in 2012, before regaining some strength, which could be justification for profit taking in AAPL (the tax change offers added incentife in this).
    Any comments on adjusting long positions based on this suggestion?

    Graydrake

  • Ryan

    Has this site been abandon??? I hardly EVER see the daily updates on comments like there used to be. No comments by Travis for 12 days!?!??

    • I don’t think so. Graph says it all. I only update if I see something that needs explained.

  • PD

    Is there a way to sort the comments so that the most recent ones shows up at the top

    • Use the drop down arrow under “discussion” can sort by newest.

  • Graydrake

    I am in AAPL diagonals and have been rolling my weekly shorts against the long. With the objective of maximizing return, in your judgement is there an ideal strategy for timing the rolls both when the ticker is moving in your favor and against you?

    Graydrake

    • If the
      stock is trending up, I would wait longer, if down, do it sooner. You have to
      be very good timer to do this though. I just stick with a consistent strategy
      for any market.

  • think those puts at $570 will hold it?

  • Roger

    Travis..Are you going to provide all 4 weeklies and monthly charts? Thx, Roger

    • Not as of now just because the OI will be most relevant as a front week. Too many people will roll out positions week to week so looking out further will give you a false sense of the OI.

  • I love the graphic representation of your charts. Would you consider doing one for leaps too? That way we would clearly see the landscape in options for short, medium and long term. I think it would be interesting. Just a thought

    • Reason I don’t go out further than 1 month is because when a monthly expires, so many contracts roll out to the next month. This in turn changes the OI landscape. I personally ignore everything past the front month.

  • Apple Man

    what is blue & yellow lines ( which one is call & which one puts ? ) ? Thanks how about chart graf? thanks again

  • kidderek

    Travis, could you explain a little more about the JAJO ex Leaps? I understand the options cycles vary by company.

    • The October options have been trading since last December. So there has been a lot of time for call options to build up. This October expiry has so many calls that were ITM when AAPL was trading $700, that it will only cause AAPL selling pressure. And we are witnessing this right now. It will be temporary. Once this expiry goes away, AAPL will start fresh until it runs into another expiry problem. Just the way it is. AAPL has to swim upstream.

  • kidderek

    Travis, why aren’t 680 calls the high OI?

    • To account for it changing. If stays at $680, does not have negative consequences.

  • Trader21

    Nice call last night for the $660 push off

    • Thanks. Just relaying what the options market shows. Market mechanics says it should go up when have that many ITM puts.

  • ella

    IYO … anyway aapl move up near hi call OI by friday?

  • Roger

    Travis..Trying to est FQ4 iPhone sales- Gene Munster says Sales realized upon actual ship to customers, ok so all the pre-orders scheduled with 2 to 3 business weeks won’t qualify as sales for FQ4 but how about when Aaple stuffs the channel, does that count as sales? Thx, Roger

    • No, the numbers AAPL reports are what they ship to stores/resellers etc. Not actually in customers hands. Example; if AAPL just shipped off 5mm iPhones in a container ship from china, they just sold 5mm iPhones or will include those in the reported number.

  • DP

    Hi, if i may post a question: in the AAPL weeklies why do you define as upside max pain the 700$, when there much more vol on the 680$? Thanks!

    • The reason I do it, #1 this is an event week so could see lots of volatility. Really best not to even play using the OI because of it. #2, I am all about having the highest probability trades and never taking a loss. I would rather see you make 50 cents selling a $700 than $$2.00 selling a $680. What happens if closes $683 on Fri, you just took a loss, while the $700 didn’t. #3, I do it this way for anticipation, if $700 never becomes the highest OI, no big deal — no harm. Say tonight a bunch of $680’s close and $700 rise. I try to anticipate that happening.

      • DP

        Thanks very clear, i suspected that you had the risk management aspect in your mind as well. Very interesting and helpful. Cheers

  • Roger

    When Samsung appeals the $1B verdict or $3B punitive damages, do they have to deposit any money? 2nd Q – if the prelim injunction becomes permanent, Samsung will appeal as expected, so is the injunction suspended on appeal?

    • I wouldn’t be the one to ask on court cases. Sorry.

  • Paul Rowe

    Hi Travis,

    First time commenting here. First, I want to say THANKS for these pages. They are part of my daily briefing and are extremely valuable in managing my Apple trading. I also have a hold position that I don’t “manage” Sometimes I wonder why I work so hard. The buy and hold has done as well or better than my trading. On the flip side, my trading is getting better. Thanks in part to you.

    I also look at the outstanding volumes on my thinkorswim platform (I’m a TDAmeritrade customer) and it takes a bit more visualization. But one thing I look at is the ratio of puts/calls at each strike in my mental image.

    This week is interesting. You might think we were going to peg 660 because lately AAPL has pegged at the first sizable call peak. However, I note tonight we seem aimed for 670. The peg is generally identified by Wednesday afternoon. I attribute this week’s higher level to the push ahead of anticipated iPhone release, but some speculation on the outcome of the trial might be in there too. Buy on rumor, right? Get ready to sell on news.

    We had a big build today on the 675 calls, I believe. I don’t recall seeing them above the neighboring calls yesterday. Most weeks, the new entrants stay closer to the current price.

    Also, this week we are probably getting a little push due to an uncoiling of the spring of monthly expirations. A lot of earlier positions built up at the evenly priced 650 level and that held last week back a bit from trading and fundamental levels. So this week there is more room for the strikes to run up a bit.

    Finally, back to my earlier comment about ratios. This week the puts at 660 are 75% as many as the calls. That’s a bit on the high side. It has also helped pop the emerging peg level up to the next call peak.

    Find me posting around as VicAustin, VictorHAustin, and TravisAustin. Travis is a good name, and it’s the name of the lake I live beside.

  • Roger_sach

    Travis, Why was the volume so low today, day before ex-div date? Thx, Roger

    • #1 everyone who wanted div got in a while ago, what caused run from $570. #1.75, August Wall St goes on vaca and volume dries up.

  • Pete

    Taking up more space here. Sorry. I had the comments sorted wrong so I didn’t see you had already answered the dividend question. Thanks

  • Pete

    Good Morning Travis
    What effect, if any, do you see the dividend having on OI? and when?

    • None, just like any stock you will have big option volume on div day as people will exercise their calls.

  • Roger_sach

    Travis,
    Ex-Div date is 8/13 so your 8/8 last day trade date I guess is due to 72-hour settlement rule and for options it should be 8/10 due to 24-hr settlement to exercise long call, correct? 2nd question relates to temp price adjustment – will the price on 8/8 and/or 8/10 decline by 2.65 and back to normal on Monday 8/13? I’m anticipating price action on 8/8 to 8/10 to be interesting, should be interesting for calls those 3 days, would appreciate if you could please add some color to OI and all options action from 8/8 to 8/10.
    Thank you,
    Roger

    • Ex-Div is 08/09/12. The record date is 08/13. So last date to buy is 08/08 due to weekend and 3 business days to clear. In a vacuum, AAPL will drop by $2.65 on 08/09/12 and never re-coup that $2.65 again as it went out in cash payment form from the company. Of course they are adding more than the Div amount, but that was in vacuum. Next week’s options will price in the Div, calls will be cheaper and puts more expensive. On 08/7-08/08 you will get a lot of activity as many options will be exercised to get the div.

      • Roger_sach

        Travis..Thx for clearing it up. Specific to calls e.g. I’ve written 590 Calls for Aug opex (have Jan 600 Leaps as Long). So on 8/7 or 8/8, assuming 590 Calls are ITM or OTM by max 2.65, these Calls will be exercised and I have to deliver stock at 590 + 2.65 in cash? I need to figure out how to manage these 590 short calls. Thanks, Roger

        • There is no way to tell if they will be exercised or not. Depends on what people cost basis is etc. You can either see what happens and let your broker know in advance “if you get exercised on your $590’s due to div, then exercise my $600’s at same time” Or you can wait until 08/08 and close the spread or roll the $590 to an OTM strike.

  • BadCop_NoDonuts

    you said you usually sell calls Tueday before close to take advantage of IV collapse. Care to divulge your strike price or how far OTM you will go from where the stock is just before close?

    • Since AAPL is so low right now, I will probably wait until Wed open to sell covered calls. I don’t need protection from AAPL being $600.

  • jeff

    Travis, what’s your take on the small number of puts? looks different than what we usually see… too early to tell or suggesting free fall mode? thanx!

    • Just has to do with earnings is all. Nothing unusual.

  • whitehatwizard

    Hey Travis, I have been following your site and your ideas for sometime now. It has certainly provided a new perspective to the option market. I would like to suggest one thing for old eyes. Is there a way to add vertical grid lines to your graphs?

    • I’ll see if I can do some real faint lines. Mainly the graph is just a visual. It has 100% accurate numbers, but may look a little misrepresented because how graph is set. I like to use an actual options chain if you want 100% accurate OI figures. Sorry for late response.

  • Hello Travis . what do you think could be the highest price apple could see on OPEX next week after this selloff from 620-602 and not being able to break resistance of 620 ?

  • hey travis / the sell off from 619-602 could you attribute this to the big funds covering their short calls for a gain , selling their stock for a gain and rebuying cheaper stock to sell higher calls with high IV for the earnings run up ?

  • hey travis , this sell off from 619 -602 . can you attribute it to the big guys closing their short calls against their stock and re buying cheaper stock and long calls?

    • I would say 1 of the causes is people closing out their calls. If you go over to manipulation side, funds can sell off the stock to either go neutral their short options and lock in the gains, or just so they expire under what they sold them for. Either way making a gain.

      I’d say mix of both.

  • Chris

    Ok so this is a bit of an option strategy question. Supposed I wanted to trade the pre-earnings run-up by purchasing spreads. Specifically, the 600-620 July 21 bull call spread. Currently it’s priced at around $9.65. However, the same spread for July 13 (this week) is priced at $9.10. They’re practically worth the same even though the monthly has 1 more week to get past 620.

    Has anyone here every taken advantage of this by buying the monthly call spread and financing it with the weekly? Not sure if it makes sense, since you’d only benefit if AAPL is below $609.10 by end of week, but still thought it was worth asking!

    • Thats what’s great about options, endless possibilities. Yeah, I like that play as ‘speculative type’ In this earning environment it has a decent shot of coming out profitable, not fully, but.

      Just to throw this out there, a more conservative way to play this in the future is: Sell a July 14 1C $625/$630 sprd and buy a July 21 1C $600/$620 sprd. The mindset of this is; you were already going to take the $600/$620 risk on, so this will reduce your net debit.

      If that July 14 expires worthless, you sell a July 21.

      You hold a $600/$620 sprd for $10 dr and sell a $625/$630 or $630/$635….etc for a credit. Now you are lowering your cost for the 2nd time. Say AAPL closes $640. You make $10 on your $600/$620 and lose $5 on the $625/$630 for a net gain of $5. Say AAPL closes $610 for 2 Fridays in a row, at least you made the $0.xx back.

      Going short weekly $600/$620 and long monthly $600/$620 could be a badass payout. Swinging for home run type stuff. I really do like it but, you need to thread a needle. But, knowing what we know, It’s not terrible odds.

      For future use, see how I used selling that call spread as a crutch, to lower your cost basis on a trade that was going to take place no matter what. You can safely lower that C/B by about $0.50 at current moment.

      • Jeff

        You might even consider selling 2 x 625/630 against 1 x 600/620 – at least for the first week. No?

  • Graydrake

    Sorry a couple typos — for the next weeks and in order to garner as much premium

    Graydrake”

  • Graydrake

    When do you publish the chart fo rthe next weeks’ weeklies? I understand it is important to enter on the prior Fri in order to garner as much premium as possible, but no published data at the moment.

    Graydrake

    • I personally don’t trade next week’s until this week is done. Reason is so many people roll out there options and you want higher OI the better. I don’t publish it until Sunday night as I think it’s pretty useless to use because of how few trades are on it. (personal opinion) Actually I didn’t mean useless. Better words would be ” I don’t give it much weight”

      Only place I know you can check is just your brokers option chain.

  • BadCop_NoDonuts

    sorry, not clear on what a “red breakout cell” is.

    • When the stock closes outside or above the OI I mark that week off in red. It is rarely a 1 week event and means a breakout or breakdown is occurring. This case was a breakout.

  • google

    did those $555 puts jump up in just the last day or so? Thoughts on what that means?

    • That’s how they were Monday night, they just got bigger. It’s just normal trading, nothing unusual.

  • google

    Do you think the much higher OI for calls indicates more selling pressure this week……. or not so much?

    • The call OI always looks like that. It’s always higher 99% of the time.

  • Skipper1290

    Weekly’s started trading last thursday…..so monday is not the first trading day……I use my covered call system to buy back half my covered calls on friday at $.05 and sell the next weeks covered calls…Then on monday I sell the other half using the strike price one level above the 80% probability range…P.S probability is spelled with one “l”not two…

  • this would work better as a bar graph, since these lines make it difficult to see where the actual strikes are.

  • dt8

    Travis – regarding your comment: “But @ $574, the calculator spits out $535+ expiry @ 98% prob. That isn’t using OI…”

    What calculator?

    • Just my own spreadsheet calculation. It’s not from any site.

  • RUBICON

    I m going to looking for the hedge fund buying in for the end of month Q. Then a small sell off during July’s week one and two, then we should see all the fake bad news about whatever is not happening with AAPL…then a good drive up back up to right near or about 600…

    • Mrs. C

      $600 came just in time as I said it would. I would like to see the options take us down; then a good to solid quarter to set us up for
      a nice run into earnings and follow into same forward to December and January. I do now more then ever have a real problem with all of the stealing of aapl’s products by large companies and think that this may be another item to watch going into the back to school and holiday push. Good call to Travis and keep up the great work for us all…

      • Nice call, played out just like you thought. This is why being specialized in 1 or a couple stocks is superior to tracking 500. Have good 4th.

  • Roger

    Travis…Thoroughly enjoyed your article, what took SA so long? Thank you for educating us all AAPL fans. Best regards, Roger

    • Thanks, I wasn’t aware but they have a new AAPL vetting process. Your article has to go thru a rigorous process to get published. They only allow so many per day …or something. It’s a good thing because there was way too many AAPL articles about nothing. I suppose for page views as you can get paid for your articles, I chose not to.

  • Querent

    Would you mind explaining how you determine your probablity ranges, please? I would be interested to know your method.

    • It’s based off historic data. Where AAPL closedin relation to highest open interest.

  • BadCop_NoDonuts

    I’ll be very interested to see how this week ends, since certain people have now indicated that a move to $600 would not surprise, which is at odds with the weekly OI call peak. (not to mention the weekly Peg of $550.

  • Ryan

    How are you taking the Monday Holiday into account?? Do you feel aapl will trade down with investors not wanting to hold over the long weekend??

    • AAPL always has higher odds of trading down on Fridays regardless of 3 day weekend or not If does nothing new and wouldn’t be worried.

  • Curiobot

    This week (May 14-18 ’13) would seem to be a pretty big failure for the model. The options expiry was at the end of Friday’s trading, was it not? Apple closed at 530.38. Was there an “event” I wasn’t aware of? 530.38 was outside the 90% probability range by almost $10. Have I misinterpreted what was being predicted here?

    • Yeah, AAPL hit the 2% area for the put side. If you traded the call side you were good to go.

      • Curiobot

        Really? So you’re saying it was a graphing error or a data oversight, or something like that, not a failure of the model? Not trying to be obnoxious, just looking for clarification. Actually, I did trade the call side, so lucky me.

        • Yes. This is my note on the monthly.

          “04/29/12 – * $500 is your actual highest put OI at 24.5K. Because that came from earnings and they got left out to dry, I’m going to use the next highest strike for the 80% range. Same with the $600 calls. Since they came from earnings I’m going to use the $650 strike for the 80% range. If you want to use the highest OI strikes at all times no matter what, you know what they are”

          I ignored the $500’s. My fault. $500 ended up being the highest OI. I should have listened to the options market and had 98% on $500 strike. .

          • Curiobot

            Right. I remember reading that. Thanks for the explanation!

  • hey davis I just signed for member , and got a trade filled . but went to long term portfolio and did not see anything ? so where do I got to see the trade? can you send an email please grachu@mac.com

    • I’m working out the flow of things on my end. Everything is up now, I sent out the tweet then went and updated site, did it backwards I suppose.

  • Louis Wan

    Hey Travis, why doesn’t OI update real-time on our trading platforms? And why don’t you sell, for example, put credit spreads at say, one strike below 98% prob of 540 i.e. at 535? Wouldn’t that be a 100% prob and we’ll be making ‘loadsamoney’?

    • OI isn’t a real time stat. It’s not possible. You can, all it does is raise the probability, like I sold May 19 $480/$485 puts for portfolio model. Not 100% odds but more than 98%. Closer you sell towards $0, closer you get to 100%. (selling puts)

      • Louis Wan

        Thanks Travis. But why don’t you sell this weeks (i.e. weeklies)? As aapl was dropping today, you could have gotten the 535/530 spread for, say 6% ROI that expires this Friday?

  • BadCop_NoDonuts

    Hanging on every word, Travis. Interesting week to say the least. I was hoping for a follow up on the May $600 call volume. You said they will need to get “worked off”. Do you mean that the writers will want AAPL to close below $600 (May) so those calls expire worthless?

  • Ted S.

    Travis, I know that you are a long-term trader and as far as options mainly do just CCs and Credit spreads (and some LEAPs). But if you were to actually use the “poor man’s algo” yourself, what would be your vehicle of choice for this? Just straight-up weekly or near-month ITM calls/puts? Any particular delta you see as optimal for use with this algo? I would not interpret any response as an endorsement or recommendation for this type of trading—just really fishing for some ideas here!

    • I do use the algo. I’m the inventor. No, you can’t use options for it, it is for stock only. You need the 100 Delta. Your trying to take advantage of the effects options have on AAPL. Stock is a must. Whats nice about the algo is you do not need a full 100 lot. Use 1 share for all it matters.

      This is just 1 of the many strategies I use. I’m 99% in AAPL, yet 100% diversified. Long stock, short stock, long calls, short calls, puts etc. (not in same account of course)

  • stockdogs

    Ok, so I’m in AAPL long term and selling covered calls. I don’t want the stock to be called away so what do I do
    Friday when AAPL is way above my strike due to a big run up like what happened in March.
    Seems like all I can do is bite the bullet and BTC losing my premium and missing out on the underlying run up. What would be the proper play?

  • stockdogs

    Great work Travis! I am new to this and there must be something big that I do not understand —
    I am staying long and writing covered calls as you appear to be doing however since the start of April my stock losses
    have overwhelmed my call premiums big time. The stock depreciation has been very painful for all of us that were buying AAPL over $620.
    Was I supposed to have gotten out of my stock positions entirely during the downward trend and not write calls or do you feel it is wiser to “ride it out”, stay long and continue writing calls every week? I want to get to the point where premiums cover cost basis but with these kind of drops it seems improbable. I was hoping you could explain what would be the preferred position to take during these downturns. Thank you.

    • I take 2 different stances, long term account vs short term account. Long term account I have held these since ’07 and will continue to hold, I sell calls against these.

      For shorter term account, I did take a 1/2 long position at $580 a few weeks ago and have been writing calls against it. I haven’t done too much other than write options since or due to earnings. AAPL is in limbo right now.

      As far as your long goes, if it is for longer term I wouldn’t sweat it at all, keep doing what you’re doing. If for shorter term, up to you, but I don’t see a reason to realize a loss on it.

      Not to preach but if you ever feel pain from a trade, your position size is too big.

      • stockdogs

        Thank you very much for your comments and explanations of your positions.

        “if you ever feel pain from a trade, your position size is too big” is the answer to my problem.
        You are not preaching at all and I will apply this advice. A reduction of my position size looks like the fix. I appreciate it!

    • Graydrake

      Reply from someone new to this site, still lurking, still not trading AAPL based on pain and still trying to understand the AAPLpain concepts; but active on other options and long stock strategies. Take it for what it is – opinion!

      The market continues to be the major driver of stock prices, even AAPL. There are a lot of problems in the us/ global economies, there are significant global political concerns, the market has made a big run without a major correction, some have a concern about AAPL w/o Jobs and there are a lot of very heavy profits in AAPL. While AAPL offers terrific fundamental opportunity, a successful trading stategy must include a balance of the existing risks that are added by the long run up, the fears and the fact there are a lot of people in AAPL with large profits.

      If AAPL moved only on the strength ot its fundamentals, hey the decision is a no brainer. A strategic market entry, however, must be based on the fundamental stengths of the ticker, but also the muscle in the positive/negative drivers of the general market. I think the commentary that Travis has been consistently adding since I have been here, convey this concept. My experience suggests that a large number of high probability trades offers better opportunity for most traders than just a few high return/risk trades, and they offer a greater chance that you will be looking over your shoulder a year from now and saying 2012 was a good investing year ———-and you will get fewer gray hairs in the process.

      Drake

    • Graydrake

      Stockdogs – just one more comment, supporting Travis’s comment on sizing trades. The greatest thing that could occur in 2012 is that we both improved the strength of our investing decisions.

      Tracking the basis of your success/failure on 100 trades this year and making 15% on your risk, contibutes immeasurably more to assure the long term success of your investing career, than making two stock purchases that net 20%.

      Drake

  • Louis Wan

    Hey Travis, the chain opened up on the put side today, do you have to wait til the end of the day to know what is the OI below 550? Cheers.

  • Graydrake

    Travis – Enjoying your website!

    I am not in a long position on AAPL at the moment, nor have I entered a trade using your pain concept.

    If a trader is planning on selling weeklies under your guidelines, is there a specific concept you recommend in selecting the long to complete a diagonal?

    Drake

    • If your new to selling options, I would do it in paper trading 1st. Then I would use the monthlies not the weeklies at 1st. The reason for this, it’s much slower and easier. I do most of my selling on the monthlies. For a long position to cover your short. I use stock or DITM LEAPS, example Jan’14 80 Delta +, (deeper the better)

      • Graydrake

        Thanks for your response. I am relatively new, but have completed about 150 oprtions trades, mostly naked purts, bull put spreads and bear call spreads – plus a couple versions of these. I have a firm set of option entry rules for chart patterns, downside protection % and required annual return; which work exceptionally well in most market conditions. THE ISSUE — when volatility is high there more opportunities that meet my rules than I have capital to risk, but in times like now, I have difficult in isolating trades that meet my rules. Since I refuse to violate the rules, my option portfolio at the moment is thin. Actually my difficulty in finding trades at the moment is what triggered my interest in your site, particularly in your commentary that suggested you liked low volatility periods.

        Eventually, I hope to have a set of rules that define my entries for your system as well.

        Drake.

        • Sounds like you have it under control. My best advice since everyone has their own style and comfort level is, just watch it for a few months and see if any light bulbs go off. You can use any of the strike you like. For example on the month, I sold $465 and $485 puts that have nothing to do with any high OI strike, but just margin of safety because it was pre-earnings.

  • BadCop_NoDonuts

    He’s referring to “My Take on 98%: XXX.XXX” just below right of the chart.

  • d8

    Hey Travis, I have been trying to avoid asking/bothering you with this, but can’t seem to interpretate what you mean by:
    – “If it’s in green I think it will hold, if red I wouldn’t make a risk trade on that strike.” and
    – “I always recommend using the 98% range or better for risk trades.”

    Could you please expand in a little detail?
    – ie. what will hold if what is green? (and what measure are you using to define green/red?)
    – ie. what type of risk trade(s) are you referring to?

    Thanks much. Sorry if the answer is obvious and I just don’t see it (yet).

    • d8

      Thus far, what I take away from your 80% and 98% ranges is to get credits for BeCS and BuPS at or beyond the 98% strikes.

      Just not understanding what you mean be green-hold/red-risk, and what trades/strikes you’re referring to here.

    • If I have the a 98% range and say both are in green, let’s say $600 – $610. This means I think these strikes will hold the stock. Meaning AAPL will expire above the $600 and below the $610 by Friday. The 80%-98% range is derived from historical odds. It is the statistics of what has happened in the past.

      Risk trades for me is anything that can lose 100% in only a few days. In my mind really it would only be selling credit spreads. Lets say the range is $600- $610 and I have the $600 in red but the $610 in green. I would then say it is ok to sell a credit call spread but not ok (in my opinion) to sell a credit put spread. And there would be some reason for this, news, how stock acting etc.

      But at all times, I think it is ok to sell covered calls for example. You can use any strike you would like as you cannot lose money on the ‘covered’ part. It actually lessens risk, never adds.

      Or say the $600 put I have in red, you can still try to use that as a buy point if you wanted as you can’t lose 100% overnight when buying stock.

  • Rick

    At this point what would be a bearish sign that apple will continue to sell off vs. rise to a new high? Would it be if it closed below 600? Also how does earnings yesterday effect the rest of the week?

    • Right now I am going to just let this week play out and not paying attention to OI too much. Will wait until next week. I’m switching over to fundies and this thing should be a rocket ship. Any weakness is a buy. Do not fear it.

      • Rick

        “NOT FOR REPOST PLEASE” Can I talk to you through email or on the phone. If you remember last week I told you I really screwed up, well, I would like to talk to you about it. Let me know if you need my email or phone number

        • contact is at bottom under about me

          • Rick

            travlewis@aaplpain.com? If so, I emailed you already.

          • Rick

            Travis, your email is not at the bottom, it says contact me “travlewis at me” Nothing else. On the other side is your name and under your name is the aaplpain.com but nothing else.

  • Roccoz1

    Travis,
    Now that we have blowout earnings what do you think. We can look at for a price.
    I have some may 620 calls and 620/625 debit spreads,wondering when may be a good time to sell.
    Thanks

    • I don’t really trade front month straight calls, too much time decay etc,. But I think AAPl move higher, it’s just with calls you need to get the speed of the move correct to. That is what I can’t say. Gains a gain really.

      • Roccoz1

        You are right. I decided to take the money and run

  • John Smith

    huh?

  • Graydrake

    I am a high probability trader, who currently has a very thin portolio because my rules work a lot better with high volatility. Your comments on applpain working well in low volatiolity tweaked an interest. Also in one of your responses you suggested that for your style, it is a lot more important where appl will not go, that where it will go. Never thought of it that way, but this defines my strategy exactly

    I am very new here, so I apologize in advance for fundamental questions, whose answeres may reside somewhere in your archives.

    I am assuming you prepare the charts. When do they begin and are they dynamic? Are there parameters for the ideal entry using your concepts on weekly options?

    Thanks for any input!

    Drake

    • Hey Gray, take your time and just see how it all works. This is not a good week to start but next week and on will be good to see how it all works.

      Yeah, I prepare them. They are updated once a day (around 8pm PST) Open interest updates around then. Once it’s released I update. Yes, it’s dynamic in a day to day sense. The ideal entry depends on what you are doing, buying stock or selling cash puts or covered calls etc. In general, when the stock get to the highest OI strike is a sell point, when gets near the put OI is a buy point for stock.

      Or if selling options when the stock gets near the put OI, sell a put spread/puts using the 98% range, same thing on the call side.

      you can also create even higher odds using the highest put/ call strikes as buy/sell points when the stock is coming back the opposite way. Example, if the highest call OI is $600, only use it as a sell signal when AAPL goes from $605, $604, $502, $599.99 — now it just became a high prob sell signal. Make a bearish trade of some sort now.

      • Graydrake

        My current strategy – selling naked puts on stocks I want to buy, bull put verts and bear call verts. In general I look for trades with uptrending bullish charts that are ending a pull back with premiums that provide 15% downside protection (at 6 wks, lower if less time to exp) and 200% annualized return. Generally, I could pick the best of 10 or 12tickers each week when the volatility was high, but now am having difficulty finding them. Will be very interested in your concept, in particular because you report its strength in low volatility periods.

        Is your chart auto generated by data captured off the net, or are you doing some manual stuff? My experience suggests it is irrational euphoria that drives premiums, puts and calls, to levels that provide great opportunity for numbers crunchers. Sometimes smaller companies that may not be getting heavy scrutny by the biggies offer the greatest opportunity. So once I have followed the leader on aap for a while, I would like to check out some other tickers.

        Thanks for your very prompt response!!!
        Drake

      • google

        When I look at an option chain on the trading page, it shows open interest for puts and calls in the whole range for each expiration, giving a rough idea of where the peak interest exists for each. Is that the data you are using more or less………… or is there another source you use to determine OI?

  • Tom

    Travis, I wasn’t following you last year. Could you summarize what you thought about apples floor between Feb-June of 2011 versus now (once this apparent revaluation has more of a consolidation period)?

    • I’d have to go back and look at that one. It all starts to become the twilight zone after a while.

  • gotnoname

    so which pain should I look at for the coming week, the weekly or the monthly? both have very different ranges

  • Roccoz1
  • Yustas S

    Interesting close. I am not sure I understand how it can be explained by the weekly chart above. I thought it was supposed to close around 625. Travis, could you please explain what happened? Thanks.

    • There was an 80% chance of a close from $615-$630 and not just today, all week. $625 should not be looked at whatsoever. If it closes in the middle, fine, but that is not a target. $618, $620, $626 etc is all the same.

      I think volume overwhelmed today and fear took over. Simple as that. There is no magic answer. Things happen and this is where the 20% comes in. the 98% range ended up being solid though.

      • Roccoz1

        Travis,
        Does it look like the apr 595/590 and 585/580 call spreads will be still be below your range for next week and expire otm.
        Looks like some pretty good premium there and still in the 98%+ probablility range.
        Is that how you look at trades?
        Or am I missing something and going to lose it all!

      • Roccoz1

        Travis,
        Sorry about the typo I meant the apr 595/590 and 585/580 PUT credit spreads.

        • On the monthly I have had the $535 strike for 98% range all month. Depending on Monday, you could possibly look to $575/$580 credit put spreads. But that $580 isn’t within any of the ranges. It is just a high OI strike is all.

          • Roccoz1

            Thanks travis
            Guess I was looking at your weekly info and trading the monthly. Oops.
            Looks like those sa 590/595, 580/585 put credit spreads may be dangerous.
            would you wait to see what happens on mon and tue before adjusting?

  • Sean

    Travis is there any reason to think we will not see green MON/TUES. Has the trend changed? Your comment below to Tom got me confused as for what your thinking Monday! Thanks

    • It’s just a probability stat. Not a for sure thing. With that said, I don’t see why it wouldn’t continue. But say it didn’t occur next week. I would not be alarmed either as it is monthly expiry and many positions start to roll out etc.

  • Tom

    Travis, could you add a bit to your last posting because it seemed to come out of nowhere. where is this “chatter” coming from. If it’s manipulation, then fine, I can understand that. But after January earnings (unlike October) I don’t understand the fear. I figured there would have been more profit taking during the course of this quarter and then more of a run up into earnings. That hasn’t materialized yet but do you think this is all being condensed into the next 7-8 days? At what point do you think all this built-in profit will have to be resolved with a significant sell off (after earnings) or is there now a true floor on the stock preventing the kind of consolidation/selloffs we’ve seen the last few years?

    • Who knows where chatter comes from. When people want in at cheaper prices, fear mongering is the simplest way to accomplish this. I don’t see any big correction coming, say to $550 etc, I think with the dividend and AAPL’s cash balance, more funds will sit in the stock and not trade it. Plus, with the buy back, although not all that much, AAPL can step in start buying. That news will hit the street and cause a floor. I think we have not seen a sell-off because ’07-’11 was the sell-off. AAPL is being re-priced, as it used to be priced for failure. It was also an undiscovered stock as crazy as that seems.

  • Rick

    Yes, I agree with jaewon, I am also new to this style of investing (OI based) so when we are talking about the options are the puts purchased puts or sold? Same thing with calls for that matter. Are you saying that AAPL will go up tomorrown but then down throughout the week next week? At what point would you get serious about buying calls in this pre earnings state? I know you said to sell them the monday or tuesday just before earnings but would that be buying them sometime next week? I would think watching for that big dip and catching them then.

    • I always look at the market where the options are purchased, not sold. I do this for consistency. At times I will get things very wrong, it’s because the options were sold not purchased. Didn’t mean AAPL would go up, just outperform he SPY. If you planned on buying a straight call, I would sell it before the release, only do to the IV crush that will follow. If you plan on holding thru earnings, I would do it thru stock or a spread.

      • Roccoz1

        Trav,
        Buying a may 620/625 call spread.
        Would it be best to sell before earnings or hold into may?

        • With any spread it’s best to plan on holding until expiry to gain the full amount. But if you do have a nice gain before 24th, can always take 1/2 off.

  • Jaewon

    I’m a new investor here, trying to familiarize myself with the terminology. What does CR stand for? What does “alpha against the SPY” mean and imply? By concentrating on where it won’t be, do you mean investing in options that are out of the money? Thank you and I’ve been learning a lot from your posts thus far and has been paying off greatly.

    • CR stands for credit. Alpha means outperformance against a benchmark like the S&P. So if the S&P is down 1% and AAPL is down 0.5%, AAPL has 0.5% alpha as it outperformed. What I do is sell a lot of options. I don’t buy them for the most part. So knowing where AAPL won’t be has much higher odds. AAPL will not be $0-$600 or $650-$1,000. So I sell options in those ranges. I let other people play i the $50 range while I play in a $600 range.

      • Casi Mclean

        Travis, this is the best explanation I’ve heard yet. You broke it down to simplicity! Jaewon, I’ve been trading options for 6 years and some abbreviations still confuse me––so don’t feel bad. It think a lot depends on where you get your education, but Travis has taught me so much in the last 3 months. Thanks Travis

  • Tom

    Travis, my first impulse is to say this selloff is options related, but isn’t there a difference between options related selling in a down market to one in a market that is bouncing. Ahead of earnings, is this weakness even a little surprising given what the indexes are doing? Sure we are still in your range but…

    • AAPL is always decoupled from the market. It would be unusual if AAPL had strength going into this monthly opex. Also, if you go to the manipulation side. You would want AAPl low as possible, expire as many options, then buy it into the Monday before earnings on the cheap. Has been happening for 5 years.

      AAPL is always decoupled because of how many options it has. Look at GOOG vs AAPL. Not even close (using 2 stock with same price) Another reason is, for option hedging, you can use the underlying stock 100% of the time. In other stock, if the positions are big enough you can’t always hedge with the underlying but have to use something else.

  • Casi Mclean

    As always Travis, your explanation of this weeks price action helps me to better understand this whole process. Thanks so much for the time and effort you take to help everyone!! I’m looking forward to your video.

  • Yustas S

    Travis, on your latest update (04-12-12), why does the red arrow on the Call OI point to the 650 strike and not 630? Looking at the graph, the 630 Call OI seems to be higher than 650. What am I missing? Thanks.

    • The only reason I did that is to keep those who write credit spreads safe. I also have a feeling AAPL may gain a little strength possible. Nothing crazy but maybe little higher than $630. If AAPL just hangs out here tomorrow, then I will bring that arrow down. Just to keep people safe is all.

  • Sean

    Travis is there anything to worry about with the volume on the puts 2x than the calls at $625. You don’t see any signs of the trend changing? Everything still looks good to you?

    • No trend change so far. I imagine it will pause for a while but no major sell-off.

  • Rick

    Do you think because of the last two days being so down in the market that the rest of the week may rise like it did last week? Also with earnings happening, do you think it would be a good idea to hold the call options (May) into next week? I don’t know what the OI is telling us in regard to whether AAPL is going to be driven down before earnings or is it going to get pushed up into earnings. I agree with you that there is nothing except for the rest of the market that would be pushing AAPL down like it has this week. I am just at a bit of a loss on what to do.

    • I’m not sure where AAPL closes exactly. I think it just hangs out in the current OI range. As far as your May call. If I ever have a single short term call I use it for the run-up into earnings and sell it the Monday or Tuesday before they report. This is a play on the elevated IV. I don’t take the risk of holding anything short term for earnings.

  • Tom

    Travis, what are you looking for to play earnings or is that not your style? Where do you currently see the upside potential over the next 2 weeks. At what point do you think 600-660 becomes 640-700 or would we not see that ahead of a potential gap up on earnings. I’d like to participate in the earnings run up but keep expecting the rug to be pulled out from under me

    • This is why I like to keep things simple and always have a core AAPL position on and never sell it. For earnings I always do the same thing. Sell covered calls on the monthly (stagger them) and sell puts or put spreads. I don’t think it expires above $660, but I also only have on covered calls for April, so if it does, it’s not a big deal to me.

  • Rick

    What are you seeing for the rest of the week though? My stops just kicked in so I am totally out from Friday. do you see AAPL going up this week? I would think it would because of earnings coming up but I know earnings can be squirrely.

  • Rick

    I guess this is where you would use the saying from the old TV show….. “Patience Grasshopper”

    • Yeah, watching minute by minute can get a little tough. The weakness is caused by the jobs report and funds just sell the whole market. It’s nothing AAPL specific.

  • Rick

    I don’t understand, Apple was so strong on Friday and there didn’t seem to be sellers present. I thought Apple would be much higher at the open and very strong this week especially with earnings coming in a couple weeks. What happened?

  • Tom

    Travis, really appreciate the insight. In that hypothetical, when apple is in bullish mode, buying weeklies as opposed to shorting the common when aapl is at 629 still seems dangerous. Do you personally look for a significant amount of weakness before trying this approach? How do you identify the point in time where you are comfortable playing put weeklies. Do you need at least one week where aapl closes at the high point of puts instead of calls.

    • I wouldn’t ever buy weekly puts, I use stock or would use a 1-3 month out puts or spread actually.

      • Dfolden

        What about writing the weekly puts? I’ve been doing that with success.

        • It’s just a general comment as I don’t know everyones strategy. If you feel comfortable with it, you can do it on any day of the week. I just wanted to see how this AM played out

  • Tom

    Travis, I understand now your concept for when Apple will really show weakness (as it approaches the put interest) but was wondering if you have found over the last few years reliable red flags ahead of that movement. I ask because it seems like the put/call spread is fairly wide and once we do hit the put side of the graph, what signals if any then point to the magnitude of the weakness? Basically how much of the downside if we get real market weakness do you think is realistic to catch?

    • So let’s use a hypothetical. Let’s use the OI spread we have now of $610-$630. And say it’s a Tuesday and AAPL is at $629, well this is your sell signal (let’s assume AAPL is trading sideways/range) so you sell short/buy puts. Now AAPL drops to $620 or half way, it’s up to you on what you do now, but say the market is selling off too, so you keep 100% or 50% at least. Now AAPL trades down to $610 and it’s Thursday, just keep holding the short. If the put side gives way and we go into a correction, your good to go as you used the $630 as your sell signal. If AAPL hits $609 then comes back to say $612-$615, close out and take your major gain.

      Not saying it’s that easy but thats how it would go down.

  • Rick

    Travis
    Already this morning the pre market is up over $627! I guess this is a pretty good indication that AAPL is going to stay very strong today and into next week. What are your thoughts?

    • I think the stock looks really good. Lets watch today and see how it all plays out.

  • Hi Travis,

    I’m new to trading and I’m trying to understand your theory / system. So far I like it, it seems to explain many stock movements. However, I find it difficult to completely understand it… I have the following questions:

    * What is your reasoning behind this: “When a call closes it causes selling pressure. When a put closes it causes buying pressure.”? I would think that the closing of a call reduces selling pressure… because the selling pressure is caused by the option sellers who want the options to expire worthless… if they buy back their options before expiration they should not care anymore about where the stock closes?

    * I understand how you determine your 80% probability range for the closing price of $AAPL. But how do you determine the 98% probability range? You write that it’s 1 strike OTM? E.g. right now the 80% probability range is $610 – $630. 1 strike OTM would IMO be $605 – $635… but it’s $600 – $640.

    * The statistic about $AAPL closing 98% of the time within the 98%-probability range is only correct if you examine the options on the expiration day and not earlier, right?

    Regards,
    Mark

    • 1) When you buy a call the commercial paper who sold it to you have to hedge, say 50 shares. You go to close this call out on Thursday, you sell to close they buy to close. At the same time they sell those 50 shares they had as they no longer need the hedge. Multiply that scenario.

      2) Yeah, the 98% range has always been 1 strike OTM, since AAPL is such high dollar stock now, I have moved it out early in the week to forecast the strikes changing. This way you can choose to use the highest OI (80%) or I’ll give you a 98% range where I take into account future price action. This way it is stable. In other words I meant to tell people I changed the way I was doing it but never got around to it.

      3) see #2

  • Tjballers

    Where can I get the most udpated OI tables? My TOS platform shows some different values for today. It shows OI for 610puts at only 9100.

    • All the sites update their figures in the AM. I get the data from a clearing house. This site will have aapl and spy OI figures before any other site,

  • JS

    Not sure what you meant by the “if you’re a bear, you’re not going to like tomorrow’s OI” comment – looks like a textbook 620 pin to me. I think the fact that many people will be ditching out early tomorrow for a long Easter weekend will only lower the total trading volume, making this even more likely for the HFT bots to be in firm control. What do you think?

    • The comment came from looking at AAPL’s OI and the SPY along with how AAPL traded yesterday. It showed lots of strength. $620 close is perfect. Though AAPL looks like it has too many buyers for that to happen.

  • Cli2g13

    Hey Travis, the OI on the 620 calls is quite high as well, what are the chances that it’ll get pinned at 620? has there been a case like this previously? (not counting the monthlies since they tend to get high OI on certain major points).

    • The $620 strike is a picture perfect close. Doesn’t always happen like that. Thats why sticking to a range is superior. AAPL is showing lots of strength today.

  • ::T man, do you know when the next series of AAPL options past Jan 13 will be available for purchase? Is this something that is cyclically on schedule or @ random ?

    Mike

    • Jan ’14 came out last year, did you see those? Nothing will come out past those 2 though for a while. It’s on a specific schedule.

  • Mikefw223344

    Hi Travis – this is a great site you have here. Do you think the run up today (4/4/12) at 3pm had to do with weekly puts being closed out?

    • Yeah, I think that was some of it. Overall, the action was very bullish as it should of kept dropping or stayed $620 at the least.

  • David

    Travis, thanks for you great incite and service.

    I may be naive about AAPL “market makers” control over maxpain but I’ve been watching (and successfully trading) by your concept of up Monday-Tuesday and down Thursday-Friday. Correct me if I am wrong but I observe that by Wednesday, your weekly chart will usually point to Friday will close at and that price will be where the highest put OI crosses the lowest call OI which is 615 this week.

    Now I watch the AAPL price and volume for each day. If, on Thursday (Wednesday this week), the price is trending down to that maxpain price (615 this week), you will not see any large sell orders because the market is going where intended. (Today there was an initial push at 10:30 of 250k shares to get this going). Now watch tomorrow mid to late day trading. You will see a lot of large sell orders pushing the price down to 615.

    This seems to follow every week unless there was a special event like the new iPad announcement or anticipation to an earnings report.

    Do you think this is pretty much the rule? If so, what about other popular issues like AMZN and PCLN?

    • Yeah, that’s pretty much the routine. I don’t ever look for AAPL to close where the call/puts cross, if it does that’s fine, but I place my bets on the outside of the range. Then on Fridays I will look at the open and watch the volumes to see if I can forecast the close. Like this week the best close would be $620.00. does it close $615, $618, $620…? That’s pretty low probability to gauge. I like to play outside this chaos zone.

      With that said I BTO butterflys all the time on Fridays so….but this is play money, not trying to engage my ‘never take losses’ mind set.

      Overall, if it was a perfect world, the stock would close at that point every week, things come up, econ data, rumors etc on Fridays so need room for error.

  • Sean

    Travis any concerns w a bad unemployment number Friday w markets being closed. Will you still be looking for up Monday?

    • That’s definitely a risk. With an up Mon-Tues your only banking on historical odds and a flat stock side of the market. If it’s a bad number and selling comes in, then out goes the up Monday. You also need to see the last day trade (tomorrow) to give you more info. This could be one of the weeks were it’s not worth the play since we are missing the ‘Friday’. With that said I think the # will be inline and no big deal.

  • Casi Mclean

    Good question,Tom and thanks for a great answer,Travis! It makes perfect sense. But what if the overall market corrects, most stocks will correct with it. Do you think AAPL will keep rising through ER––maybe into May––even if the market corrects? I ask because right now, the NYSE has had 7 distribution days, the S&P has had 5 and the Nasdaq is at 3––signs that an over all market pull back may occur sometime soon, of maybe 8%. Any thoughts?

    • If the SPX corrects than AAPL probably would too. So all you do is gauge it by the put OI. Your 1st sign would be AAPL going to the put OI. Now you would watch it there. If it shows no buying interest, then down it will go. To find a bottom you watch for strength to come at the put OI level.

      • Casi Mclean

        Okay . . . thanks. Your insight and comments are amazing and you help so many more people than you know. Thank you so much for sharing your thoughts with everyone!

  • Sean

    Travis what would be the key indicator we should look for when Apple starts to reverse trend. Not worried about today expect this but just wanted to know what to look for? Thanks

    • If you sort the comments to ‘newest first’ see my comment to Tom a few minutes ago.

      What you would see is the exact opposite we have been seeing for a few months, AAPL would never be at the call side but always at puts and breaking thru them if it is in a correction.

      • Sean

        Thanks and sorry didn’t see sort by much easier now!

  • Tom

    Travis, at what level would you start to differentiate between simply options induced apple weakness and market induced weakness that would presumably have a much more serious affect on apple?

    • It would trade different on Monday Tuesday it would be lower, also when the puts don’t hold it, that would show true selling and will be going much lower. So this week everything fine, if AAPL closes $590 Thursday, then not fine. As long as it bounces in the OI ranges = normal/neutral. When goes thru 1 side = bias/bearish/or bullish

  • Tom

    Travis, obviously you strongly believe in the concept of max pain, but have even you been surprised at how well the options market has predicted this never ending move up in Apple?

    • Not sounding arrogant, but no, not surprised when using the OI as a strength indicator. This is why using options to forecast is great, it’s real money placing informed bets. Or it tells you how strong or weak AAPL really is. It tells you a lot when you have the most speculative of speculative traders get proven wrong as they didn’t speculate enough — translated — when you buy 10% OTM calls that expire in 4 days and AAPl runs right up to or past that strike. It just proved there is no amount of speculation that is ‘crazy’ enough. That shows you strength

      • Tom

        travis, do you find that your approach doesn’t work as well in down markets? How does your information translate as a weakness indicator.

        • works the same. down markets are actually easier to catch a bottom as AAPL never has heavy puts trade on it, so when they do, thats all she wrote and it marks the bottom.

  • Jodie

    Hi, I’m new to your site and trying to learn how to use it. Do you use the monthly open interest in the same way as weekly? ie: expecting stock to stay within the range?

    • Yeah, I use the monthly the same. All the volume is traded on the weekly so it pretty much dictates everything. Don’t get discouraged if you are confused at 1st. Take a few months to see it in action and go from there. No reason to make a mistake now and ruin the next xx years. Best to take your time now, so you make it xx years.

      • Jodie

        Thanks Travis! Can you recommend a video or page on your site as a good place to begin learning?

        • Um, try the tutorial page, I did those a long time ago and they probably need updating. Overall, you can use this data in 1 of 3 ways. #1 Buy/sell points, buy at highest put OI, sell at call OI, #2 use a range to sell options, this gives us the odds and all we have to know is where aapl will’ NOT’ be, not where it will be, #3, strength/weakness indicator. If AAPL can go right thru the call OI = very bullish, lots of strength. If the puts can’t hold AAPL = bearish and shows us there are no buyers.

  • Sean

    Travis, will Apple have a hard time staying above 615 this week due to OI at 620 or is there a time when it will just keep going. If so what would tell us it can keep going even if the OI doesn’t show it at the higher strikes?
    Thanks

    • I want to see the OI tonight and can get a better outlook.

  • Tim

    As far as I can see as of tonight the highest OI for calls is 615 and for puts 590.

  • jr

    Hi Travis, I fully expected a 610 or maybe even a 605 and not a 600 pin for Friday. I am trying to understand why did the MM pin it at 600 instead of 610 where it was most efficient? Was it because of the huge imbalance of call to puts or some other reason.

    • Thats why I don’t trade for exact strikes but use a range. Exact strike has pretty low probability. At times on Fridays you will be able to see an exact strike coming but most of the time it’s a waste of time. Things come up in the market all the time. This week I think last day qtr selling is what caused the selling in AAPL on top of calls. Also, it’s not up to MM, it’s the market as a whole controls the flow. If you believed in 100% manipulation then yes, it would be non-retail money moving AAPL.

  • Midas

    Travis, I’m confused about the timing of the option chain updates. As of _right now_, I’m seeing that the strongest weekly OI is @ 590 (not 600) and 615 (not 620). This isn’t a full update?!? That is, there will be further revised #s on Sunday night? …and the current chain isn’t a tell?

    • I haven’t updated anything. If you wanted the OI for Mondays trading right now, it’s $600 puts and $610 calls are the highest.

      • Midas

        Travis, may I e-mail you a screencap of the most recent weekly option chain for $AAPL that I have? It shows completely different volumes and OI from that of Friday morning. I have no idea what I might be missing… You would see from the timestamp that it’s from late Friday night.

        You aren’t using numbers from the “Qtr March 2012” chain, correct? Wouldn’t the “weekly” chain be more up-to-date than the “Qtr March 2012” chain?

        • Midas

          …and I’m referencing updates from my brokerage. I know that you haven’t updated your numbers yet. Just to clarify what I meant…..

  • Rick

    Travis, did you ever find out what that article meant and what that would mean for apple? Also, I am looking forward to reading what you think next week holds for apple and it’s road to 620….650….670………700+ ??

  • Omfs1234

    My husband bought yesterday jan ’13 620c at 70.0. can I shoot him?

    • Tell him, “everyone knows you buy AAPL on Fridays” (kidding), (but not really)

      If you ever wanted to ‘buy’ protection or felt you needed it, you can sell a covered call against that LEAP. Then you have protection and lower your cost basis. An example is, say you hold the $620 jan’13 for $70 and you want some protection — you can sell the Jan’13 $700 call for $33. Now your cost basis is 70-33 = $37. If AAPL drops to $500 the $700 call will be worth $8. You would then buy back the $700 for a $25 gain. Let AAPL run up again and repeat.

      Or say AAPL rockets to $800 tomorrow and stays there, big deal. That ‘spread’ will be capped at $80, but you bot it for $37 so that over 116% gain. (generic example with real prices)

      • Omfs1234

        you just saved my husband’s life :). thanks.

  • Rick

    The reporting website was benzinga.com. It came up on marketwatch and thinkorswim

  • Rick

    What does that mean for apple that the weekly puts rose 464% ?

    • Where are we looking at 464%?

      • Rick

        That was a big news article on Market watch and on the news feed on my trading platform. Came up option alert:

  • Tom

    Travis, where would apple have to close today for you to feel there was fundamental weakness beyond options related activity?

    • Under $600 but I would need to see Mon trade because this is month end you may just have excessive selling. If you needed you could just buy some puts to get you thru the weekend or covered calls.

  • Sean

    Hi Travis was there any update for today? What are you feeling for today’s close and are we still going with gap-up Monday?
    Thanks

    • Not much to add so no note, will do vid or something this weekend. $600+ close or like 607.50 +/- , Yeah, I think up Mon-Tues.

  • Mickey

    605-610 close today because I know the why. On Wednesday I sold the 620 weekly calls and 600 weekly puts for a 5.5 credit. two days later trading at less than .50. Mon.-Wed up. Wed-Fri down. Thanks Travis.

    • Weird things can happen on Fridays, so many people like to close out early. Your $620’s are fine but the $600 puts are close. Not trying to scare you, just letting you know in general. Nice trade.

      • Mickey

        I am ok with the 600 puts if I get assigned for a long term trade then I can sell weekly calls against it to lower cost basis.

        • Oh, perfect, I like cash puts. I would just ride those out and be happy with either outcome.

  • Advfntrader

    whats going on with this stock. 52% up in less than 3 months…will it ever see $500 again ?!

    • I doubt it ($499) It’s in a correction — a valuation correction. AAPL was and is the cheapest stock in history on a PE/Growth metric and the street finally woke up to it. All it took was that $100B cash headline.

      • Tom

        Travis, doesn’t that seem very overly simplistic. I mean say what you will about the street but what did they wake up to? What did they suddenly know in the last 2 months that they didn’t know last year. It would seem they have more to benefit from keeping apple from running uncontrollably and thus being apple to play volatility. Sure the dividend helped but where would apple be if we had started to have a market correction in February? I don’t disagree that apple was grossly undervalued but shouldn’t we get through one legitimate market correction first. And if that market correction doesn’t come then sure I guess its 700+ for apple this year.

        • I don’t think it’s too simplistic. You have to understand Wall St as a whole is not very smart. The PHD’s that make up these products and the algo/arb traders, programers are brilliant, but they make up a sliver. Hedge funds also make up a sliver of the global market. We are left with enormous mutual/pension/endowment funds. They are sheep that follow a very text book model of stay diversified at all cost. This is why AAPL is so under-owned.

          Wall St as a whole had no idea what AAPL’s balance sheet was, most cite AAPL as having $30B in cash (preQ1ER)

          Wall st pays big dollar for sell/buy side analysis. In 2009 all these analysts had AAPL’s FY’11 EPS at $6.50. AAPL earned $27.67….slightly off. But these funds modeled for $6.50 as they do not know any better. A mutual fund manager does not have time to look at AAPL all day.

          Wall St is not as complex as you think. The PHD’s make the products as the series 7’s push it. Walk into any Schwab/TD Ameritrade etc and ask thm to put in a debit spread option for you…they would give you the biggest blank stare in the world….but they sure will tell you stay diversified and we have a plan for you.

  • Louis Wan

    How do you determine that 98% prob it won’t go end above 630 this week? and is this still the case where it is now at 617? Thanks!

    • It’s based on historical data and the call/put strikes. 98% of the time AAPL does not expire more than 1 strike from the highest OI call/puts.

      • Louis Wan

        Thanks Travis, that was my first post and first week trading on your analysis. Let’s give it a few weeks of trading success and I would not hesitate to a monthly donation.

  • ChKen

    Great work, Travis. The 3d-ness of your line charts above, make it a little difficult to line up the data over the x-axis. I’d prefer it be 2d.

    • Thank you. Yeah, I’ve gone back and forth with 2D. It just looks terrible, visually. If you click the image to make bigger it helps to line everything up. Mainly the graph is for visual aid, when I want to know the exact data an option chain is best.

      Obviously I’m the one in the minority here as you’re not the 1st to bring that up.

  • Dan

    Travis,

    Can you explain a little more on what you mean by call OI “expands”. Does that mean that there is more volume at higher call prices. How is that a bullish signal if market makers need them to expire worthless? Thank you.

    • Dan

      Also, what happened last week that made you see there an imminent sell off was coming on Wednesday.

    • Be easiest if I explained in a video this weekend. When the OI expands it means the market cannot sell AAPL off no matter how hard it tries. This is a bullish sign as there are factors that should push AAPL lower. When it doesn’t get pushed lower, it means AAPL can absorb all selling and is a very bullish sign. (This weeks example I would look to end of qtr buying as why AAPL can absorb all selling)

      • Dan

        Please explain it further in a video this weekend. I’m very interested to learn more about this.

      • Rick

        So are you saying that like this past week and also like you said in your video that apple would go up Monday and Tuesday, stall higher on Wednesday then go down on Thursday and Friday (just like it did and seems to be doing now) is going to be a precurser to the stock going back up again next week? I know you can’t predict the future but this does look like a very high probability.

        • Yeah, that’s how it goes due to market mechanics and not just at random. As long as the stock side of the market doesn’t have overbearing selling, then that is the trend forever. Obviously it doesn’t happen every week as Sunday night news comes out (econ data etc)

  • Tom

    Travis could you clarify your 3/26 comment about the put spreads. Previously you had said they were a bulls best friend and now it seems you are saying that the closing of those spreads helped the move up. That sounds contradictory.

    • Yeah, bulls best friend. They have to close at some point and it will move the stock up. Higher = bulls goal.

  • Tigerpaw 1973

    Just a quick note – I don’t think some ppl reading ur blog realize that you are on the west coast… so… when you mentioned 10:30am spike on 3/26 I think you meant 1:30pm EST (NY) time….

  • Jdrizzo89

    Travis, do you see the lack of put volume potentially problematic, IE there might be no floor if there is indeed a sell off this week?

    • Jdrizzo89

      never mind just read your note

  • ::t man I’d love to see your notes for today on what this graph is saying so far. Is the range most likely to close on Friday predicated on where the highest value of call/puts is worth to expire worthless? In this instance with the graph above …the read look like they’d want to pin AAPL to 600 below the 600 strike. Am I reading this correctly?

    • Below $600 is best. Let’s see how the rest of the week goes. Since it’s qtr end, may have tons of strength. How I always look at it is; If AAPL starts getting sold off and expires under $600, big deal, we know why. If the stock never gets sold off, like say we closed $625, that means AAPL has absolutely no sellers in it and is going much higher.

  • Jdrizzo89

    TRavis, is smart money (institutions) always selling calls/puts versus buying them. For instance if a stock has a heavy put volume in comparison to calls, is this actually a bullish sign?

    • Institutions are not initiating these trades. They are facilitating them. They are not forcing all these people who want to buy calls/puts. They are just taking the other side. I always see heavy put buying as a bullish sign or that’s where the floor will be in the stock at least. Few reasons: If there are some unhedged institutions that wrote those puts they will want aapl to expire above them. Also, if AAPL did get down to that put level, those buyers would take their profits as their price target was hit, this will cause buying pressure and lift the stock.

      • Jeff

        Does this mean that institutions sometimes act as market makers? if not, how could they take the other side? Or are market makers contacting them after taking the other side of a large trade? Could you please elaborate on this a bit more? Thanks!

        • Just keep it simple, retailers are not the ones selling big blocks of options. Institutional money is. Doesn’t matter if it’s a MM or a big trader at xyz firm. Say there is a big block of 45K calls and a MM happens to take the other side. What they will do is now try to shed some of this risk, they will lower their IV to try and solicit a buyer to come take these off his hands. At this point you start to get into way too many what if’s. Like I said in beginning, keep it simple. Retailers don’t sell options.

  • Tommy

    Hi Travis. Thanks for taking the time to teach us your strategy on trading AAPL. Really appreciate it. Does this also apply to other stocks?

    • I haven’t followed it really closely on other stocks. You need to have high option volume for it to work well. I have seen studies that use Google, so I would look there.

  • Alex

    Given the final option volume profile, It seemed as if aapl should have closed/pinned closer to 597.50 than 596, which was right on with your 595-600 call. However, for the sake of achieving even greater precision, I was curious if you had any thoughts on why it may have chosen to pin at 596.

    • #1 thats why I always stick with the high probability range and not an exact close, all this in the middle is noise. But with that said, when I do wan to fine tune it , yes your correct, it should of closed $597.50 + in a normal calm market. I think what spoiled that was the BATS $540 trade. I think it spooked a lot of people early and just caused too much chaos. If today never had the BATS error, I’d say we would of closed much closer to $600. Since things come up all the time, rumors/erronous trades etc, it’s kind of useless to waste too much time on why did it expire only a few dollars on a $600 stock from where you thought.

      The closer you try and refine where AAPL will close, the greater probability you will be wrong. Overall, I say the $540 trade threw a wrench in everything and there was selling side bias on the stock side of the market. It is not possible to truly know how everyone is positioned, therefore you will come across errors in your forecast.

      • Qatsi123

        How did you guys come up with 597.50? Is it because it’s the middle of your range?
        “Let me see the 1st 30 min of trade and I can get you a more refined outlook for the close.” What were you looking for?

    • Roccoz1

      Do you think the 630/635 call spreads will be ok through fri.

      • They should be, I imagine you have gain on them now? So if nervous can close but I think 80% odds your ok.

        • Roccoz1

          With the drop today I closed out for a very nice profit. It got a bit closer than I liked.
          Thanks

          • Nice, gains a gain. Not telling you how to do it, but whenever I get nervous of a position, it means I am trading way too big a position. When you are relaxed and just ride it out no matter the outcome is when you have your size right. It may be 1 contract or 100, all depends on the person. — I use my spreads as built in stop losses, I make my bet knowing what I know at the time of the trade and let it go. That’s why I stick to highest probability I can get.

          • Rockz

            Thanks for putting things in perspective. I am new (2weeks) to tradIing aapl in this manner and did not want to make a beginner mistake and leave money on the table. I am using real money and not paper trading any more.LOL
            Looks like lots of buyers and not many sellers.
            aapl has continue to climb and you just may have been right at the $640 being the safe top.
            As we go into next week what type of strategy are you looking at.
            Do you think selling put credit spreads into earnings would be a good play to collect premium.If so what strikes are you looking at.
            This past week, I played the 580/575 put credit spread as well as a 605/610 call debit spread , and 630/635 call credit spread that I closed out yesterday and they all worked out great.
            Beginners luck?

          • Nice job on taking profits when you had them. You obviously made the right choice. Odd things can happen on opex days. I wouldn’t say beginners luck, I’d say you are playing it smart taking on only high probability trades. Your not swinging for the fences. Remember, concentrate on taking NO losses. Don’t even cloud your mind with gains. You do this and gains pile up.

            Words of advice, don’t keep taking bigger and bigger positions. Stay with what has been working and stay high probability.

            I always sell credit on earnings day. Too early to think about that though.

          • Roccoz1

            I looked at the volatility skew and the call volatitlity and volume is much higher than that of puts.
            That would be a bullish sign for the stock , right?
            So can we see another strong push higher on mon?

          • I looked and didn’t see anything abnormal.

          • Tpeglow04

            Travis–ani idea what Zaky is modeling for this quarter’s ER? Turley and Diedu are around $12 I believe?

          • Horace is $12+, Turley’s isn’t public yet. Everyone will be $11-$12.

          • Roccoz1

            Travis,
            I’m glad you mentioned not going bigger, I’m sure you have seen people their heads handed to them..And the thought entered my mind..
            I was a Navy pilot and we always said Go Big or Go Home!
            I’ll see how things look mon and formulate a plan.
            I noticed there were options listed for APR13th with volume listed but no open interest.
            What’s the situation with that and do you trade those as well or do you just do the monthlies.
            Thanks again

          • Tony

            Travis, can you give an example of how you sell credit on earnings day?

          • IV is sky high on earnings day so you take advantage of it. I like these plays in this order. Sell covered calls, sell cah secure puts, sell credit spreads at the price you know AAPL will expire above/below.

      • Martin_bartin

        Are you people seriously thinking that apple can break 600 this week? Wtf.

        • Oh no, Just the opposite my friend. Know where AAPL won’t be. Who cares where it will be.

  • Sean

    Travis,
    How can one take your information and used it to put on a trade for next weeks expiration? Is it too early, do we need to wait until Mon?
    Thanks

    • It’s too early to see a probability range. You need to wait until Sunday night or Monday. What I do: I will play the odds, when AAPL is being held down like it is today, I will go into a bullish play of some sort. This is not using any OI data, simply historical odds. I will either buy some shares, a call or sell a far OTM put spread. Basically something bullish. This is a play on Mon-Tues up,

  • Tom

    Travis, does the idea of being pinned at 600 mean that if not for the options market apple would be higher so that to show any real weakness in apple one would expect it to close at a minimum at 595?

    • Yeah, If options didn’t exist AAPL would be above $600 today and it would not have sold off from $609. So yes, this is artificial weakness, as long as you know this, it has saved us from getting out of positions when everyone else does. For true weakness it would be $580. I know thats far away so in reality, I would start looking around for concern w/ a close under $595.

  • JohnZ

    Travis, It was great to meet you in LA… You really guided my “skating to where the puck is going to be” trading this week. Made me a lot of money and, more importantly it seems some time, made me feel smart. Thanks for sharing so generously of yourself and your knowledge.

    • You too John. I had a great time meeting everyone. Like I was saying, even if you don’t use this to profit, it puts your mind at easy of “why did AAPL fall from $609?”

  • Dryker

    Would you trade a butterfly spread at 595-600-605?

    • I don’t recommend exact trades, but if you were to ask me if I have one, I would have to say yes. If you asked when purchased, I would say today for $1.05

      • I’m learning all of the time, thanks for the education Travis!

        • Glad to help. I don’t interpret the options right 100% of the time but hopefully enough to help some folks out.

  • Midas

    Hi Travis. I still don’t understand why $AAPL jumped to just over 545 on March 9th. The highest put interest was at the 530 strike, and the highest call interest was at the 550. There was additional strong call interest at 540 and 545.

    Was there an “AAPL pain” event before the closing bell due to the 540 and 550 call interest strikes?

    • Was that week the iPad event? I forget but I know what your talking about. When the call OI doesn’t hold AAPL it means the stock is very, very bullish as AAPL can absorb all that selling pressure.

      When AAPL gets knocked down from the call OI for example = normal. When AAPL isn’t affected by the call OI = very bullish.

  • Qatsi123

    Looks like they are just happy to leave at around 606 for the rest of the day…will they try to push it up tomorrow?

  • James

    Hi Travis,

    Among the orange put OI and blue call OI, which one represent the buying pressure and selling pressure?
    Thanks

    James

    • The orange put would be your buy signal. Blue call OI would be your sell signal. —- The orange put represents buying pressure will come in, blue represents selling pressure. This is 80% odds or so. If the call side for example doesn’t bring selling pressure it means the stock can soak up all those shares being sold and is very bullish.

  • Travis your insights have given me a whole new approach to begin to study and I am completely thankful. Hope to see you again sometime.

  • Qatsi123

    Travis,
    So for this week (3/20), you are suggesting that the share price could go as high as 620 and will gravitate back to close to the the highest OI call price of 600

    • I think the high side target would be $620 using that small OI hump. If AAPL did get to $620, I don’t think it would close at $600 on Friday. It may go that direction but a Friday close of $615 would be perfectly normal in my 98% range. Over time you will get an idea of how the stock acts.

  • Bcondon

    Weekly looks a bit like “frame 2” except stock price is beyond the call OI instead of behind it. Would you give any credibility to your “frames” right now? or disregaurd them because of this seemingly new trading style

    • Oh no, the frames I always use. Thats how it was from $380 to $545. And yes, AAPL took about a week break, but if this price action keeps up. It would be on another run. Your correct.

  • Jeff

    Travis, when you say smart money is writing options to retail – does it mean that (a) smart money is initiating the trade (in that case they would write the options, market maker would take other side, it would then diffuse further until it gets to the retail) or is it the other way round with (b) the retail initiating the trades. It will always need to go through a market maker, true? If (a) were the case I would expect to see a huge spike in OI due to some type of a block trade. If (b) were the case I w. expect to see a gradual increase of OI. Appreciate your view on this – Thanks!

    • Great question Jeff, I’ll get your answer tomorrow.

      • Jeff

        Thanks Travis – looking forward to it…! Addendum: Could it be that the last few weeks the game has been played the other way round – smart money *buying* options (calls) from retail. Call writers were the losers this time.

  • AAPL_Fan

    Why does the call closing cause downward pressure on the stock price? I’m not fully understanding why closing calls causes the stock to get pushed down.

    • It has to do with the commercial money who is short or took the other side of the call has to unwind a hedge. They sell shares to do this. Thats where the pressure comes from.

  • Enxx

    Travis, thank you so much for your presentation. It was a real eye-opener.
    What is your main why of playing the chart? Selling puts around or below the lower Put OI arrow?

    • Thank you and my pleasure. I personally have been selling covered calls on the $605 strike and using my ‘trading shares’ to do this and if they get called away I do not care as it will be for a gain. I haven’t sold any put spreads. I have been using the $600 area or strike as my sell signal. I keep selling AAPL when it gets up there.

      Take your time and just watch the action for months if you need to. You will start to get your own style as you see the action over time.

      The “My take” part is just to give you my opinion on if I would sell credit spreads using those strikes. Thats really the only trade I consider “risk”. Covered calls and using buy/sell points I will use at all times. (Talking all trading/short term. I never sell my core AAPL position)

  • Micah Wakefield

    Travis, thanks for joining us for lunch at the summit. It was a treat to get to learn from you and pick your brain on how you do what you do. A lot of fun…

    • Good to meet you also. I’m sure our paths will cross again at some point.

      • I echo that thanks. It was awesome hanging with both of you last week.

        • Peter Yoo

          Travis,
          1. Your presentation was fantastic. The most useful one of the event in my opinion. It should be part of training for everyone who ever wants to trade, especially options.

          2. Do you remember my comment about how the Incans needed to someho w figure out how the weather worked so they paid homage to their sun god? Well your work is akin to that spirit of understanding how to make sense of the crazy climate that we are all trading in.

          3. I really appreciate your dedication to it. Thanks a bunch also for sharing your time and ideas with us at lunch at the summit. Next time your in town hope can spend some more time and see some more of LA!

          • Hey Peter,

            Good meeting you too. My pleasure as we all are striving for the same thing. All on the same team.

  • Roger_sach

    Travis..Now that Aaple has announced dividend sometime in Q4FY12, will the Option premiums be adjusted prior to ex-dividend date or after or some other time? Thx,Roger

    P.S. Good to have met you finally at the Aaple Summit, you were like a celebrity. Thx for your great work.

    • Hey Roger, Good to meet you too. No special adjustment will take place. The market already re-priced the options today. No need to do anything else. The models now account for the Div.

  • Casi Mclean

    So much great information! Thanks Travis!!

  • Hey Travis, Great Site… Looking forward to seeing your presentation at the summit this week!
    Micah Lamar-

  • Akukadia

    Hi Travis did your charts predict the 150 point runup since January? Would have been nice to buy calls back then..

    • Yes, the options market showed a bottom at $380. It didn’t catch the $363 but $380 it did.

  • Sean

    Hi Travis thanks for answering my last question. What should one look at today if they want to take a position at end of day for next week? It seems that Apple tends to gap up every Monday and would like to know if there are any indicators to look at? Thanks

  • Sean

    Hi Travis, how should one use your info if they are just buying calls/puts or vertical spreads? ex. this week would I have purchased puts at the open on Monday when Apple was at 547 and then sold when we got down into the 520’s area, then buy calls back in that area? Also now that Apple went down to 520’s do you expect it to get back to the highs again this week or once it hits its targets does it then reset.

    Last question, if open interest is high but volume is very low do we look at highest OI still or do we tend to look at highest volume especially at the end of week. Thanks

    • Yeah, just use them as buy/sell points. Remember, those strike are not area’s the stock will get to every time. It is “no lower/no higher than. So yeah, when AAPL was at $545 it means it will be coming down. You can take profits all the way down and be 100% out at $520. Then that $520 is a buy area, as AAPL moves up you can either hold out and hope for $550 again (may, may not happen) or you just take profit along the way, e.g 50% sell @ $530 then ride rest out. — I don’t pay attention to volume at all except for Friday’s (opex)

      • Sean

        Thanks appreciate the info. Will definitely give it a shot!

  • Hey Travis,
    I’m calling for a huge sellofff right after the iPad 3 announcement on the 7th, just like what we saw in time for the iPhone 4s because no matter how good the product is, and taking their pre-event hype profits(which might boost the stock up to the event), and the media portraying it negatively and selling of just like in October. What are your thoughts on the upcoming couple weeks? By the way, did you look into that 3rd Friday pattern I found? it’s an average of almost 10% worse than the yearly moving average.

    • The one thing I am keeping in mind this ipad event is the cash on hand. Any value fund that came in recently is waiting for the cash. They don’t care about any product. And these funds do not sell or trade in and out. This is not to say hedge funds can’t cause some selling, but I think you have value money wanted to get at that cash now. Other than that I stick with my evening note. As far as 3rd Friday, I am aware that AAPL closes down 85% of the time for monthly opex (Friday). Is that what you meant?

  • Teddo

    Why do you use 3D charts? I think it is harder to interpret with precision with all the shadows/depth. And it looks a little bit ’80s or childish. Otherwise a very nice site you have!

    • You are right on the precision, that it is not. I use it for a visual guide. I figure if people wanted 100% accurate it would be best to look at the actual option chain. Thanks.

  • Rob

    Travis,
    Two questions….Where do you get your O.I. figures from…I think i have seen you update them at night but my brokerage firm updates them sometime in the morning…It would be nice to see what they are the night before trading starts for the next day.
    Also, I was trying to figure out why we did not get a pop at the end of the close on friday and then it dawned on me that the stock volume was kind of low. Do you think that in order to predict a pop at the end of the day, you would want to see a large stock volume day?

    Thanks for your insight!
    Rob

    • We did get an end of day spike right at 12:30 pst, but then it was sold off. There was not enough volume on the $545 calls was my take on it. The 12:30 strength was immediately sold off as I think you still had a good amount of $545 calls open. I get my data from a clearing house.

  • Jeff

    Travis, when you write: “Call buyers left some positions on, unlike yesterday” – can you read that off from the OI? If so, can you please explain? Thanks a lot!

    • Yeah, just using OI, it barely changed on the $530 and not all that much on $535 + strikes.

  • DaveT

    Hm, how should I interpret the chart? Will AAPL go back to 530 until Friday close? Or have we broke that barrier and there is unlimited upside?

    • Unlimited upside, when you break the call side like this, it means there are no sellers and stock bullish.

  • Roger_sach

    Travis, It seems like Calls OI $535 to $550 moved higher relatively to $530. Can some of these OI increases be due to Bear Call Spreads being executed? How do you see it? Thanks, Roger

    • There is no way to know exact positions unless you have only the most advanced software. I just keep my thinking the same that retail buys options and commercial sells it to them.

  • Travis sorry about my language barrier…. example : when the strike is in green for the Call side. Since the call side means :” will not go over that strike price” , if it HOLDS it means: __________________________? apple will continue higher past that strike price?

    thank you and sorry … about the quesiton.

    • Not sure if understand. “if it holds” meaning if aapl does not go over that strike. When I have things in green, means I think it’s ok or “green” to make a credit trade using that strike. If it’s red I thing AAPL will go right thru it. Again, just my opinion. If you have other thoughts thats fine as the OI graph has no emotion, just 100% stat based. Let me know if thats what you meant.

      • When I have things in green, means I think it’s ok or “green” to make a credit trade using that strike.
        So if the CALL side is GREEN it means you would sell a call on that strike side ( $525) and if it green on the put side you would sell a put on the strike price ( $495 )

        thanks travis .

        • You can do any strategy you like. If it’s green I don’t think AAPL will go higher than that strike, so you can short the stock there, buy puts, sell credit spreads etc.

          You can always sell covered calls at anytime on any strike as it carries no risk. (covered call part)

          • Yes I understand the trade can be any one ! SO now I am getting . For the put side if it s green it means You dont think I can go lower than that…. if red yes. OH finallly I getting , maybe bc today I am day older.( just like steve job would have been !!!)_ thanks travis again

  • travis I am long aapl and have no hedge, no covered calls, no protection. Never done anything but buy and go up and down, probably because I’m afraid to buy a covered call the first time and messing it up. I don’t mind riding all this out and holding thru the ipad3 release, but if there is a big selloff tonight wouldn’t it be smarter for me to sell out at the HOD before close and buy back in tomorrow or monday at the LOD and get more shares for the same money? Should I hold through closing and see what happens at 1 or just turn off the computer and hide? How many covered calls would I buy for the 1000+ shares I have and since covered calls limit the upside isn’t that a bad idea in this situation? Can I email you or is the answer so simple you can just post here. I keep missing the boat because when I buy in and out I seem to always stay even instead of getting ahead. But there is so much aapl_pain when it dives, know what I mean and I would really like to get more shares each time it dives and then hold. If this was earnings, for example, wouldn’t it be smarter to sell before and then buy back after?

  • runAAPLrun

    Am I missing something or why is anyone assuming there’s a dividend coming at a shareholder’s meeting? Of all the 7 topics up for discussion/vote, there’s nothing that has anything to do with a dividend. I’m just hoping for red friday = green monday again.

    • I have no idea why anyone would think one is coming, but I’d rather not find out. I always want to stay high probability so rather not make any risk trades until it’s all done.

  • One fifth of the stock price is cash. Stop thinking about the 500. What if it were 50? Would you buy it? I buy 0.70 delta or better JAN13 calls with all the profit I make selling put spreads every week or month.

  • Buckterry

    Travis,
    With the high volume of options expiring this afternoon (2/10), do you expect a big move in stock price? If so, up or down?

    • Unless big selling volume comes in, I expect $490-$495 close.

  • Ray

    Travis, what’s going on with AAPL? what do you look for in a reverse? or is the stock going to 550?

    • I think its value funds coming in and no one willing to sell shares. I look for the stock to start going towards the put OI.

  • Jeff

    Travis, we keep moving highest Call OI each day. And once it goes down we will see the same thing on the put side you say. Question: Can you tell from the OI (direction, velocity, ratio of highest put/call OI ratio, shape of the profile) when we will eventually have reached the point where the direction might flip. Say, what would you expect to see tomorrow or Friday which would tell you that next week there would be a flip in the direction. Or is that impossible to tell a week ahead? Thanx!

    • You’re not going to be able to catch the exact dollar if there was a reversal. An example: lets use a hypothetical fresh week, Monday the put OI is $470 and call is $480 and AAPL opens up $475, it gets as high as $476 and comes down to $470. Thats the 1st sign of, ok the big part of the run is over. Now we need to pay close attention. Does AAPL stall here for a few months or sell off? Seeing how it reacts at that put OI will tell you the key. So you aren’t going to sell at the top, but more importantly, you will know the major run is done. We need to think unlike anyone else on the street. Paying attention to where AAPL isn’t going, not where it is.

      • Jeff

        Thanks a lot Travis – exactly, I don’t care to max it out – But I would be very happy to have a good guess where AAPL is *not* going…. (when trading options you can set up the trade to still be doing fine if *slightly* wrong on the direction. It’s being totally wrong which kills). It would be great if you could add a “direction sentiment arrow” to your daily charts…!

  • Ryanjrocket

    “If AAPL can blow thru $470 no problem, then I don’t see this train stopping anytime soon.” So this means the 470 top limit you called yesterday as being 98% certain is now gone???????

    • $475 is 98% not $470. It’s a stat, it is always present. My opinion is something different. Mine can change as price action against OI does.

      • Ryanjrocket

        Thanks!

  • Morningemail

    Travis, great site— keep up the good work. My question is about monthly OpEx. It seems recently you had posted that 16 of the last 19 monthly OpEx dates have ended red. Can you say which dates those three outliers were and ‘why’? Were they just after SJ came back from a medical leave? Had they just had a blow out earnings, like April 2010?

    Any info and insight on the three outliers would be greatly appreciated.

    Thanks very much in advance

    • I have all the dates on the scorecard page. I only saw that 1 was related to earnings and other two not sure.

  • Nagrani

    If 470 is the outer range – why do you have 475

  • Jeff

    Travis, thanks for sharing your opinion in your daily comments! Question: How would you use the 98% ranges from the weekly OI to set up weekly income trades when lacking sufficient capital for owning 100 shares (or multiples of 100) of AAPL. Now, I know that this does not apply to your situation – but still would you consider pure option plays (e.g. selling vertical spreads or diagonals ) – and have you done in the past? If so, which types of trades and when in the week would you enter? Guess that Monday might be to early. Thanks again!

    • I would start by using the 80% range and a few AAPL shares. Sell short at the highest call OI and cover it when you have a gain or near the put OI (if don’t like shorting wit until hits put OI to buy). You can also do this with straight long puts or calls. Next I would look into selling cash secured puts or covered calls. Last I would look into selling credit spreads, you can sell just one side, say use the 98% put side or the 98% call side or both if you think stock will not move. I know you said don’t have funds for all those strats, I just laid them all out from beginner to most advanced.

      On the weekly I don’t put a lot of money out on credit spreads, I do most of any spread money on monthlies. For weeklies I’ll mainly stick to covered calls, cash secure puts or buy stock near highest put OI and start selling it as it goes higher, or do a buy-write when stock near highest put OI.

      I gave you a bunch different options as I’m not really trying to put out actual trades. Too much liability in that. As of now I would rather put out the info and people make the trades they see. As you can see, there isn’t just 1 trade that works for everyone. The only trades I put out are in the portfolio model. People see things different so I leave up to them. Put OI is a buy signal, highest call OI is a sell signal.

      • Jeff

        Travis, thanks for your suggestions! O.k. looks as if long diagonals may be a good place to start – long the monthlies short the weeklies (I prefer to have theta on my side to allow me some room to be wrong). Bullish Call diagonals @highest Put OI and Bearish Put diagonals @highest Call OI….

  • Quinnn040

    Please an update/ direction for next week thanks thanks Quinn

  • Trader Tyler

    Travis what is your feeling on AAPL “filling the gap” created by the blowout Q1 earnings report? I feel many smart traders are waiting for a pullback down to 440-430 in AAPL because that is what it always does post earnings but I seem to think in the short to intermediate term it’s a bear trap and wanted to gather your thoughts… Also–AAPL closed green on friday up to the highest call OI near 460 seems bullish but would it be more bullish going into next week if AAPL had a red friday = green monday??… Essentially looking at technicals do you think there is more left in this AAPL run-up (from $380 in mid/late Dec.) before a meaningful pullback?

    • For filling the gap, I would just add to AAPL if it happened, or sell puts down there. I wouldn’t exit 100% of your holdings in hopes of. Can’t help you on technicals, I don’t follow technicals. As of Friday, options don’t show a reversal yet. Take it day by day for now.

  • Rob

    Hey Travis,
    “If AAPL stays up here($460), watch for 35K+ $460 volume and 12:00-12:30 PST, when calls close, so will go the wall.” I have been tracking volume and O.I. for a little bit now trying to figure out day by day how many options get written or closed out. I haven’t been doing it long enough to see if there is pattern, but i am assuming that maybe you do something similar knowing that it will take 35k+ volume to close out the 460’s……the rest just being regular trading by investors. Have you figured out that you need about 3x the amount of volume on friday than there is O.I. or is there some percentage in your head, or is there more to it that goes in your calculation?

    Thanks a lot and I’ll see you at the Apple Summit in March!
    Rob

    • Yeah, pretty much along the lines of the 3x’s you stated. I keep everything very simple. I don’t have a secret formula in the back of my lab. More from experience watching than an actual formula.

      • Rob

        Thanks for your input! Hopefully i will find that secret formula! I also hope apple isn’t stalling right now!

    • Neil Silva

      I wonder if something is up with Apple other than what we already know (earnings etc.). Is there any realistic chance of a divident or split at the shareholder’s meeting in 2 weeks?

  • Mark

    The monthly Feb 18 high call OI is 20k at $470 and the put is 7k at $460 ITM. Wonder if this is good indication of where we are going?

    • This month is unusally messy. Keep it simple and, farther OTM the calls go the better. As of right now $470 would be our cap (or $475 for 98%)

  • Mubaar2

    Hey travis,
    Just wanted to say your website OI max pain is the best thing that ever happened to retail investors. Im doing really well just selling spreads and sleeping well at night. In the past I lost alot of money trading aapl options especiallly through earnings. I can still feel the pain of my saddle option trade after the volatility crush. Your ideas of how to trade earnings helped me alot. I sold 5 feb 375 puts for 2.20 and the next day bought them back for.18. You are the man. Can’t wait till next earnings

  • Mark

    Hey Travis,

    Been following you for a while – much appreciate the work you do.

    Ah…what to do? what to do? I sold a Feb 18 460 call for 2.70 last week now worth 5.50. Do you think I should roll up/out to March today or wait until next week. Looks like $460 might get broken through. I do not want to have my shares taken, but didn’t think aapl would move up this quickly. If I roll into March I can cover the Feb 460 with a March 475. The way aapl is moving we could see 475 in a couple of weeks, before you know it I could be rolling into LEAPS :)

    • I would either welcome the tax loss as when you made the trade AAPL could have easily traded down, that was your insurance. Or like you said, roll out and up. This way you can keep a gain going.

  • Jeffdi14

    Hi Travis, could you pls elaborate what you mean by your statement,
    “If AAPL stays up here($460), watch for 35K+ $460 volume and 12:00-12:30 PST, when calls close, so will go the wall.”
    I just cant get my head around it.
    Many thanks for as great site.

    • It means at that volume enough of those $460’s you see on OI would actually be closed and gone. So if OI was real time it wouldn’t be that high. If there are no more $460’s left by late in day, then there is nothing to hold AAPL down.

  • fatherof4

    Travis is the increase in call volume enough to throw off your prediction for this week?

  • Daniel

    Hi Travis, can you tell us where you are obtaining the OI information from after hours? It seems like thinkorswim is not as updated when the market is closed. The next day OI data is not showing but you already post the new graph at 12am Eastern Time?

    • I get it from a clearing house. TOS or yahoo etc all get it much earlier they just don’t update till later. I like to be on the ball and give my readers first crack at the data.

  • fatherof4

    Travis I’m new to your site. I’m holding 455 monthly puts. After reading your post today just trying to figure out what you mean by hold risk trade at $445. Where do you think Apple win pin at this week? Thanks

    • I don’t play the pin thing. Pinning is irrelevant to me. I stick to high probability ranges. I think AAPL expires between $450-$460, with 98% $445-$465. My OI graphs can be used in 2 ways. Use the OI data to sell options (advanced) or use them as buy/sell points. Example, If AAPL got near the highest put OI, you buy, when gets near call OI you sell. I keep it simple and high probability. I stay away from buying options (sans LEAPs)

      Hope helps.

      • fatherof4

        Thank’s appreciate it. Great site!

  • Tony

    Travis, as usuall you are doing an awesome job with your site and helping AAPL investors. I was just reading FB S-1 and saw something interesting. FB doesnt have a way to monetize accessing FB from a mobile device… Wonder how many users access the site via a mobile device. With the growth of mobile devices this seems to be a big miss but they will still probably trade at a 100+ multiple. I’ll take AAPL over any other company and one day we even may get at least a market multiple for our AAPL shares.

    From pg 5 of the S1 “Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;”

  • Dee

    How do we follow you on Twitter?

    • On home page has my stocktwits and twitter, they are same, linked so no need for both

  • Zen

    Travis, what do you think why the put OI is hesitate to build up? Also what do you think the OI of FEB 17th call at 430/425? I checked back, most of them was opened on Jan 6th. Just a few closed after earning. And now there are still 30000 open.

    • Hey Zen, The put OI is always small in AAPL. It’s why it always has a hard time moving up and such a low P/E. You rarely get higher put OI than call in AAPL. As far as the monthly put OI at $425, I like that strike as your floor in AAPL. ($420 for 98%)

  • Guest

    Travis, what sort of action are you looking for to tell you that a short term top might be in?

    • #1 for the stock to stop running right up to the highest OI every week. So far, no signs.

  • Big3mkt

    thanks Travis

  • Great site Travis. It shows that you spent a great deal of time studying and teaching AAPL option theory.
    Keep up the good work!

    I’ve been short the Feb $465/475 bear call spread since Wed, it’s been working great.
    Thinking about closing at least half today, maybe turn the rest into a condor, just in case we
    get a pop in AAPL price on Monday. loving this drop in implied volatility.

    Best,
    Micah-

  • Hey Travis, long time follower, you’re insight is absolutely brilliant. It’s given me a whole new perspective on options. I’m wondering where you get your OI numbers and if they’re automatically updated. I’m checking at 1:13am EST and they look like they’ve already been updated for 1/27/12 (Friday)? CBOE.com doesn’t even show OI for Friday yet. Thanks!

    • Hey , Scott

      I get the OI data from a clearing house. I don’t have an automatic system yet. The figures get updated around 6-8PM PST. All these companies CBOE/Schwab, yahoo etc all have the data at this time too, but for whatever reason they don’t update it until the AM. I update mine immediately. So if you want the numbers hot off the press, come over here :o) Have good one.

  • Mark

    Hey Travis,

    Great Site. Looks like the $450 will hold up with weekly OPEX tomorrow. Was thinking of writing weekly Feb 8 CC if AAPL is up on Friday… ~$10 OTM. Any thoughts?

    • Are you just trying to take in income and don’t want stock called away or you don’t care? More protection or income? I sold March $475 and March $500 calls yeserday for portfolio model covered calls. This was for protection. If AAPL sells off, I will buy back and sell more, to lower cost basis of long position.

      • Mark

        I am trying to take in income and lower cost basis of long position on a weekly basis. Perhaps this is too aggressive and too short of a time frame and should be looking further out to give my stock more room to the upside. Do you ever write CC for the weaklies?

        • Yeah, I will write weekly CC for trading type things. Like say I bot 100 shares when AAPL is at put OI, I will then write a weekly covered call either ATM or at highest OI strike depending what I’m trying to do. For longer term positions, I usually stick to monthly CC. You can also go out to say Jan’13 and sell $500–$600 CC and if AAPL sells off, buy it back and take in a nice gain. There are so many options you really need to stager them all (diversify) . Some weeklies, some monthly, some 6+ month, some ATM, some 20% OTM etc. The great thing with a covered calls, there is no bad choice. By adding the CC part it actually lessens risk, not adds.

          No need to rush, get a feel for the stock vs OI and your strategy will come to you. May take 4 weeks or 12 months, don’t worry, you have the rest of your life to make these trades.

  • Guest

    Travis, I know that this week will be tough, but if 450 can’t be cracked by Friday, do you have any reason to believe the profit taking would continue on Monday. Do you have any sense for the likelihood of breaking 450 in the near term (next 3-5 days)?

    • Looks like $450 will be ceiling this week. Let’s see what Monday looks like with the stock price move and OI, then go from there. Kinda sit back and watch mode.

  • Hi travis 2 small questions:

    if $450 holds or not. You will just have to see how stock reacts at $450. If gets sold off, then we have to wait until next week
    What do you mean by this ?

    . If goes thru it, shows a lot of those are short calls.
    Why would thiis show that they are short calls.? I would think the opposite since I would think they want all those calls to expire worthless?

    Whats your call on the after hours 468 print? do you think this could be revisted this week?

    • Not sure about next week,but over next 3 months it will be.

  • Buckterry

    Travis,
    What strike and expiration are you selling on your covered calls?

    • I was selling $475 and $500 March calls at the open. Depending how much protection you want, go closer to the money. If you only want to create a dividend, go away from ATM.

  • mikeinmtl

    Hey Travis, unbelievable that the P/E ratio is getting compressed again in AH after experiencing such tremendous growth. What do we have to look forward to for April earnings; P/E of 11? Thanks for the great work.

    mikeinmtl (Stocktwits)

    • The P/E compression is going to be coming to an end. As the cash rises it will have to bottom out soon.

  • Anonymous

    THANK YOU SO MUCH TRAVIS! You are a god send to me and every other investor who’s watched in turmoil as Apple makes moves that seem uncomprehendable! Now my eyes are open and it all makes sense! What’s more, I’ll hopefully be able to use what you teach me to earn some income and get enough for the down payment on the farm my wife and I are trying to buy!

    One question though, how often are your graphs updated? For example, on the weekly graphs on monday, can you look at the open interest and come up with a range to trade a spread, such as an Iron Condor? Or does the open interest change enough so that you want to wait until later in the week, say Wed, or Thur before opening such a trade? (not this week of course but for after this week).

    Also when do your new graphs come out? For example, under “monthly” you have the January graph? When will the Feb be available?

    Thanks for all your help. I’ll make sure to donate .1% of my profits to you on a quarterly basis, a small price to pay for world class knowledge and hopefully, if things go well, together we’ll both get very rich thanks to this wonderful company.

    • Graphs are updated soon as OI is made available. OI is updated during the evenings. I like to wait until Tuesday or Wed to use the data, longer you wait the better. You don’t always want to use an iron condor (if your trading credit spreads) at times you would just want to pick one side only.

      I personally like to use covered calls or cash secured puts if I am going to be aggressive, when I use spreads I make sure to use the highest probability possible, as with spreads, that money goes away forever. Good luck.

      • Anonymous

        So do you update the weekly’s and monthly OI graphs each night? Once/week? For the score card you are using, (82 weeks and counting) what day do you use for picking the range? For example for the week ending Jan 13, it reads “OI calls, 425, 11.3K, OI puts 415 9.7k) was that on monday night? Some other night?

        • Updated every night soon as OI is released. Scorecard uses OpEx OI or Thursday nights OI going into Fridays trading.

  • good morning travis you have your take on the 98 % for 430 ? is that right ? the highest OI is 425 . I would think it would have been 420 ?
    one strike less than the highest OI ?

    • 98% goes 1 additional strike OTM. $420 would be 1 additional ITM. Then if I have in black on ‘my take’ then I have no opinion, Red = I don’t think holds, green = I think holds. Usually going into Monday I never have opinion, like to let OI build up. This close to earnings/event, the less I actually use the data. More observe than anything.

  • Travis we have the scenarios at the same we have
    1. flotaing at $420 all day
    2. +25 K on the 420 calls

    so would it be taking off today? or popping next week ? which should we look for ? thanks…

    Concentrate on how AAPL keeps going right to the highest OI = bullish. If AAPL floats $420 +/- all day, watch for about 25K+ volume on $420 calls and then AAPL would be clear for take off towards end of day. If it gets stuck to $420, then Monday will pop.

  • Good morning travis. as per your comment “Whenever AAPL has broken the highest OI, it is never a 1 week thing” I am wondering what your thoughts are if we will close the monthly JAN 21 above 410 ?
    I know I should not say about my personal holdings but I have a major position on the 400-410 spread for the JAN expiration
    not sure If I should sell today or keep it.. any thoughts would be so welcomed… thanks

    • Smart answer is take your gain, it’s almost at 100% value. Risky answer is, take it day by day or sell 1/2 now then play day by day with the rest. #1 thing. Never think about gains, think about never taking losses.

      • thank you travis. I just read this post. Two hours ago , I sold 1/2 and the an hour later the other half .
        I guess it get s me to be smart. thanks so much. by the way. I am donating as soon as I get my credit card info in order. thank you so much for being avaiable. Again thanks !

  • Frankcapra03

    Travis I have said it before and I will say it again.. YOU CAN SEE AROUND CORNERS when it comes to Apple. You have helped me really pickup my game to a whole new level.. After 28 years of doing this. I can do things with more confidence today than ever before and as you probably know 95% of this is psychological and being able to ride though the storms like we just did to $360 now that all goes out the window as we are approaching new highs and I was buying on the lull to $360 and have made 2-3 as much as if I had just bought and held and didn’t add more etc with conviction.

  • Xian

    Thanks Travis! Really enjoy the updates

  • Travis , Great explanation on the first paragraph about apple reaching 415 and why it will get rejected or taken out .
    . But now that we are on thursday , when is it possible to take advantage on this for a trade? what day? in other words if this chart was shown to me on monday I would have been traded long up until 415 but I see it now I am not sure how to use it as I feel I am too late for the trade …. thank you

    • Yeah, sometimes it’s just best to “live to trade another day”. We have the rest of our lives to trade. Don’t worry. What I would do now is just watch $415 level, if breaks it/holds ($416.50+) today than I would say very high probability of going higher $420? Or an easier way would just let today play out. If we close at $415 today, open $415 tomorrow and trade there all day. Wait for end of day and get in as will break $415 and run higher. I will have another note tomorrow. Or if you see $410 would be an entry point to start position. Basically closer to $405 better.

      When to trade it, really any day. Point is when it gets near the highest OI is the entry/exit. Not so much a day.

      • thanks travis.
        I am trying to figure out the best process to use your webiste and take advantage of your charts and not feel I am missing out on this great info

  • Rob

    Travis,
    I will have to start off by giving you props on your call last friday. You were spot on. The question I have for you is why did you feel so sure about it? Are you just basing that off O.I. and heavy volume on ATM strike, or are you also adding a “run-up” into earnings bias, thinking that there has got to be buyers piling in when the options are closed out. Im just wondering because this doesn’t repeat week after week. Thanks for your input.

    • It was/is based off of how the stock has been trading. AAPL kept trading close to $400 and ‘wanted’ to get over it but kept getting knocked down. So you know the direction, all you have to wait for the ‘thing’ that is causing AAPL to not go above. The ‘thing’ was $400 calls. You knew they were going to close, and when they did AAPL would be released.

      This week is different. AAPL got knocked down from $410 twice in the week. We are not trading near the $410 so those calls will not close but expire worthless. This is why we are at $405. Every week needs to be taken ad hoc.

  • Frankcapra03

    Trav, so when it is in black does that mean you would not be writing calls at say 1 strike above so in this case the $415/s? I am trying to figure out the color system… Red, Green, and Black.. Red means what? Don’t write/risk? Green means write/risk? Black means?

    • Red = I don’t think will hold, Green I think will, black = neutral, no opinion.

  • Jeff

    Nice call Travis. You nailed the close. Better yet, AAPL broke through 400 easily. Thanks.

  • Anonymous

    Travis, where do you get the most up to date OI information?? Is is released streaming real time or do you look tomorrow morning for today’s action??? Does the TOS “tools” tab show last days OI or is that real time???? I just want to learn where to follow the OI volume and movement as close to “real time” as possible. Thanks!

  • Dtfein

    Travis, if it breaks through 400 (given the OI here) what does your gut say about the upside potential through Friday?

    • If it did you may get near $408 intra-day but I think would settle at $405. It’s so late in the week and holiday is why.

  • Anonymous

    explain again why you are not expecting $400 to be much resistance with all the open weekly and monthly calls at that strike…..over 100k contracts combined.

    • The $400 monthlies is what I have been referring to. These weekly $400’s are real and will be resistance. Just yesterday the weekly $400 OI exploded. For now the $400 OI on the Jan’12 does not bother me as it’s dated positions. Add in earnings ‘event’ and I don’t see $400 a problem on monthly.

  • Roger_sach

    Travis,
    It seems like Puts OI have not much resistance (much lower OIs), will the MMs push down the stock to 390 or even down to 380 by opex?
    Thanks,
    Roger

    • I don’t really see lower than $390. But looking at the OI commercial money would benefit most with AAPL at $380. I don’t see Wall st standing in the way too much right now. The market was down intra day and yet AAPL held $390. I don’t think there are enough sellers to get it going in that direction.

  • Anonymous

    Travis,

    Don’t understand your comment “stock splits do nothing is laughable. See above.”

    Are you saying we’d be rid of this “manipulation” nonsense if AAPL split?

    Thanks very much

    • Yeah, I think if AAPL split down to say, $25 a share most of the retailers buying calls would switch to stock. If there is only a small amount of calls, the affect on the stock will become much, much less. The profit motive from Wall st would in turn go away.

      • Frankcapra03

        Not really, they would just do to the stock what they have been doing to the options… Right? So they would short millions of shares and thus drive the price down to cover then buy millions of shares to drive the price up and then sell.. it can be manipulated with or without options.

  • muk

    Travis,
    Were can I get oi info for friday’s expiration.

    • Above is for Friday, do you mean Saturday? So what the official “close” OI was? If so, you can only see what was OTM, not ITM. As far as I know you can’t get that data.

      • muk

        I thought the OI was delayed and that the above data is actually thursday’s trading data. If all I can get is OTM data thats fine but I wonder why we can’t get ITM. Anyway, were would I find OTM oi data

        • OI is only updated once a day, during the night. So as of now all sources will have the same exact data, yahoo finance, your broker, here etc. OI is not a real time data point. I wish it were.

  • Mark J Mcallister

    When you say “frame 4” what are you referencing? Thank you

    • If you go to the “Misc” tab then to “Frames” I made the Frames page mid November. The comment your referring to is from last week, Thursday night I believe. If you check out the video on the home page “Breakout $400” is a little more updated. I was looking for a breakout up to $400 then see how stock reacts against that strike, was $396.xx close enough? We will see.

  • dofo

    For the longest time it seems as if the highest OI has always been on the call side. Looking at the numbers today I see the highest OI on the December options in the 385 puts (29,190) vs. the previous highest OI, the 400 calls (27,967). What would you take away from this? Also looks like the OI in the 390-400 calls is dropping while the OI in the 415-420 calls is going up…you see this as a sign we might break out over the current resistance and 400?

    • The put OI being slightly higher doesn’t show anything. It would need to be 1.5+ times higher to be extremely bullish. With regards to the $420 call OI climbing, thats a good sign, you want the call OI to be further out the better. I don’t have much of an opinion on the $400 calls holding or not, wait and see is all.

  • tom

    Travis so how to intrepret this with frame 4. So do you mean the run is going to begin or its over

    • Anonymous

      It began once you broke $380. So we should keep rallying.

      (Note: with the unique times we are in, at anytime an EU headline can derail this. Need to keep on guard for that)

  • Tony

    Travis, congrats on the new site and thanks for all the work you put into it!!!