Another Bite Of AAPL With A Call Credit Spread

by Trevor, Benzinga Contributor
February 9, 2011 10:24 PM | 2 min read |


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BookingAlpha subscribers opened a new Call Credit Spread on AAPL today.  AAPL showed continued strength today in contrast to the rest of the market which was down.  AAPL recently broke resistance at $350 and has continued straight up knocking on $360 today.  However, the stock is looking a little tired and I think the Verizon/IPhone news is baked in.  I don't want to be short this stock with my enemy's money, but I do feel like some consolidation is in the cards.  Below are a few of the reasons supporting the opening of today's Credit Call Spread:
 
--Pop outside upper Bollinger Band on daily & weekly charts
--RSI crossing overbought threshold
--Williams %R extremely overbought
--Fast Stochastic back to very overbought territory
--Average True Range declining = indicates running out of steam, needing consolidation
--Short strike located more than 1 week Average True Range away from current price
 
This trade placed is a very short term position using February options that expire next Friday.  The shrinking Average True Range (ATR) of the stock implies exhaustion.  This fact, coupled with the other overbought indicators, makes this a pretty attractive trade.  Furthermore, while the fundamentals and financials of the company are out of this world, I think some cooling off is due for the stock in light of the run as of late. 
 
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Trade:
AAPL Call Credit Spread - Open
 
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