nolavabo
5:23 pm on July 23, 2010 562 days agoReply
I blame this one on weekly options. Pinned to $260.
Imagine you are a big fund. You want to buy some shares to play earnings. You tell your media friends to go nuts over the antenna, and your analysts to keep talk about missing on margins. Every time it goes under $245, you start loading up. Simultaneously, you sell the July $250, and pin it to $249.90 on opex, as it expires just 2 days before earnings.
But you know Apple will smash earnings again, and you should sell after earnings. So after opex, you start selling covered weekly calls, at a price that locks your profit in. Get called out? No problem, you still keep the money. You unload a few on Wednesday at the open. You see it selloff all day. You don’t sell at the bottom, but you have a plan. Then you keep it under $260 all week. How? By setting massive sell orders every time it comes close. Everybody who bought $260 calls is seeing the IV evaporate away. Finally on Friday, you let it go over by 30c a few time, since IV has fled enough that it doesn’t matter anymore. By the close, make sure to pin it to $259.94 so you can screw even those who bought the calls on Friday intraday.
It was driving me nuts watching it all day. It was also making me a little bit angry.
I bought August calls with 10 minutes to go. I expect it will break out of $260 on Monday.
@nolavabo
yep, it was strange how it hit $260 for like 6 times yesterday and few times today
but what was the volume on those options to be able to control the share price for more than one day ? – we had cumulated volume of more than 70M the last 3 days …
nolavabo
9:58 am on July 24, 2010 562 days agoReply
Generally speaking in order to write options you need to own the underlying stock first. More than a few funds came out recently saying that they were unloading AAPL as it had already doubled for them. If I were them this is exactly how I would sell – keep writing CCs until I was called out, pinning it each month at expiry.
mikeinmontreal
10:58 am on July 27, 2010 559 days agoReply
Wow. GOOG back to where it was after missing estimates. AAPL still can’t hit the price the day after beating estimates.
conshmillo
11:37 am on July 27, 2010 559 days agoReply
Only problem we have right now is that all three markets are at overbought levels now (DJIA, Shanghai SSE, London FTSE100). Shanghai barely moved last night and ended up slightly in negative. Locked in a doji. London is the same only a bit in positive. We need now earnings to support the markets. Moreover GDP report is on Friday and we’ll most probably see markets go against AAPL (if keeps trying to go up) toward the end of the week. One good thing about last weak weakness though is that it was done on very low volume. I don’t think judging by the volume during those days there was widely spread selloff.
mikeinmontreal
2:46 pm on July 27, 2010 558 days agoReply
Sold all my Oct Calls…holding only Jan 11 and Jan 12 calls for now. Just a defensive move for now. I don’t like these weekly expirations one bit.
nolavabo
8:54 pm on July 27, 2010 558 days agoReply
Sold all of my 20100730 $260 calls today as well for +$1 and +$1.20. Something feels wrong.
mikeinmontreal
5:21 pm on July 28, 2010 557 days agoReply
Some market-moving economic news tomorrow and Friday….if jobs, GDP and consumer confidence don’t create a warm, fuzzy feeling, maybe a pullback into low 250s between now and then and a miraculous rise to 259.99 on Friday at 3:59…Man, I hope the weekly options don’t come back next week…..Waiting to pounce on some more long-term options….bear in mind that my advice and 2.00 gets you a ride on the bus in my beautiful city….
nolavabo
2:57 pm on July 29, 2010 556 days agoReply
Back to being pinned at $260. Sigh. This is getting boring.
I still maintain that the best explanation is large holders selling, but doing so via writing covered calls. Seems they chose the weekly ones as their favourite method.
mikeinmontreal
3:15 pm on July 29, 2010 556 days agoReply
….and another weekly expiration next week….I can’t go short-term when I see this type of stuff…Averaged down on some more Jan 11 calls this afternoon close to the low of the day…
nolavabo 5:23 pm on July 23, 2010 562 days ago Reply
I blame this one on weekly options. Pinned to $260.
Imagine you are a big fund. You want to buy some shares to play earnings. You tell your media friends to go nuts over the antenna, and your analysts to keep talk about missing on margins. Every time it goes under $245, you start loading up. Simultaneously, you sell the July $250, and pin it to $249.90 on opex, as it expires just 2 days before earnings.
But you know Apple will smash earnings again, and you should sell after earnings. So after opex, you start selling covered weekly calls, at a price that locks your profit in. Get called out? No problem, you still keep the money. You unload a few on Wednesday at the open. You see it selloff all day. You don’t sell at the bottom, but you have a plan. Then you keep it under $260 all week. How? By setting massive sell orders every time it comes close. Everybody who bought $260 calls is seeing the IV evaporate away. Finally on Friday, you let it go over by 30c a few time, since IV has fled enough that it doesn’t matter anymore. By the close, make sure to pin it to $259.94 so you can screw even those who bought the calls on Friday intraday.
It was driving me nuts watching it all day. It was also making me a little bit angry.
I bought August calls with 10 minutes to go. I expect it will break out of $260 on Monday.
Nicu 6:11 pm on July 23, 2010 562 days ago Reply
@nolavabo
yep, it was strange how it hit $260 for like 6 times yesterday and few times today
but what was the volume on those options to be able to control the share price for more than one day ? – we had cumulated volume of more than 70M the last 3 days …
nolavabo 9:58 am on July 24, 2010 562 days ago Reply
Generally speaking in order to write options you need to own the underlying stock first. More than a few funds came out recently saying that they were unloading AAPL as it had already doubled for them. If I were them this is exactly how I would sell – keep writing CCs until I was called out, pinning it each month at expiry.
Zee 2:24 pm on July 25, 2010 560 days ago Reply
correction. http://www.xtranormal.com/index
Zee 3:56 pm on July 25, 2010 560 days ago Reply
btw re : “Your comment is awaiting moderation.” What’s that about?
mikeinmontreal 10:41 am on July 26, 2010 560 days ago Reply
Yet another day under $260.
nolavabo 9:37 am on July 27, 2010 559 days ago Reply
Finally! Broke over 260. Expect a nice run off this, as she has been artificially suppressed for days now.
Nicu 9:42 am on July 27, 2010 559 days ago Reply
Am I dreaming ? 20 minutes over $260 ? I thought I’ll never see this day LOL
Nicu 9:50 am on July 27, 2010 559 days ago Reply
oups, division by zero
it’s only now about 20 minutes !
mikeinmontreal 10:58 am on July 27, 2010 559 days ago Reply
Wow. GOOG back to where it was after missing estimates. AAPL still can’t hit the price the day after beating estimates.
conshmillo 11:37 am on July 27, 2010 559 days ago Reply
Only problem we have right now is that all three markets are at overbought levels now (DJIA, Shanghai SSE, London FTSE100). Shanghai barely moved last night and ended up slightly in negative. Locked in a doji. London is the same only a bit in positive. We need now earnings to support the markets. Moreover GDP report is on Friday and we’ll most probably see markets go against AAPL (if keeps trying to go up) toward the end of the week. One good thing about last weak weakness though is that it was done on very low volume. I don’t think judging by the volume during those days there was widely spread selloff.
mikeinmontreal 2:46 pm on July 27, 2010 558 days ago Reply
Sold all my Oct Calls…holding only Jan 11 and Jan 12 calls for now. Just a defensive move for now. I don’t like these weekly expirations one bit.
nolavabo 8:54 pm on July 27, 2010 558 days ago Reply
Sold all of my 20100730 $260 calls today as well for +$1 and +$1.20. Something feels wrong.
mikeinmontreal 5:21 pm on July 28, 2010 557 days ago Reply
Some market-moving economic news tomorrow and Friday….if jobs, GDP and consumer confidence don’t create a warm, fuzzy feeling, maybe a pullback into low 250s between now and then and a miraculous rise to 259.99 on Friday at 3:59…Man, I hope the weekly options don’t come back next week…..Waiting to pounce on some more long-term options….bear in mind that my advice and 2.00 gets you a ride on the bus in my beautiful city….
nolavabo 2:57 pm on July 29, 2010 556 days ago Reply
Back to being pinned at $260. Sigh. This is getting boring.
I still maintain that the best explanation is large holders selling, but doing so via writing covered calls. Seems they chose the weekly ones as their favourite method.
mikeinmontreal 3:15 pm on July 29, 2010 556 days ago Reply
….and another weekly expiration next week….I can’t go short-term when I see this type of stuff…Averaged down on some more Jan 11 calls this afternoon close to the low of the day…
Nicu 10:10 am on August 2, 2010 553 days ago Reply
is that 260 story over yet ? or are we going to revisit that magic number ?
conshmillo 12:50 pm on August 2, 2010 553 days ago Reply
266 is new resistance. We need to pass that to see some kind of breakout.
Nicu 9:52 am on August 3, 2010 552 days ago Reply
back to square 1
nolavabo 9:48 am on August 6, 2010 549 days ago Reply
Back to 260 pin? These weekly options are horrible.
conshmillo 12:19 am on August 7, 2010 548 days ago Reply
Groundhog Day!