Apple Profit > 250% what now?
Our Apple Strangle is pumping and we are sitting on 250 % profit. What to do now?
This was supposed to be a very relaxed weekend and now I am sitting here and don't know what to do. The reason is Apple Inc. Our AAPL Strangle has reached a profit of over 250%! A reason to celebrate, right? Correct but I do not know what to do. Sell now and regret later? Or wait and regret later?
In principle, it is quite simple, commen sense dictates that with such a profit at least part of the position should be sold . On the other hand there's this hope that Apple could go much further and our position could grow way beyond our wildest dreams and reach 500% or even more. I guess just another 20 bucks upwards and the Calls might reach a price of over 23 $ which would then bring the whole strangle into +500% territory.
Luckily the stock market will be closed tomorrow, thanks to Martin Luther King. But a day off does not make it any easier. We have opened the position only recently and are currently over 250% up. We bought the APPL Calls 340/June on November the 29th for 1,86 $ and now they are trading for over 12,50 $. The AAPL chart below shows where we entered and how fast it happened. What now, what to do?
Chart produced with TC2000 from Worden Brothers, Inc.
I've been thinking about it for a while, but I don't know what we will do on Tuesday. My advice to you, sell half of the Calls and let the rest run. The risk-takers might keep everything and let the future decide. There is a good chance that AAPL will move on in the current direction (the only way is up as it looks like & never fight a trend). On the other hand any stock can experience a strong reset every day, you never know what the stock market is up to. In this case you should set a mental stop loss and then liquidate the position.
There are such and such problems, this definitely belongs to the category of nice problems.
In that sense - Strangle ahead !
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