The market was bearish last Friday as most every stock was in a sell-off mode. Trading Apple options on the put side was the winner, yet the call options did have a few opportunities as well.
Options On Apple Stock: 255 Put
The chart above shows the options for Apple stock at the 255 put strike (Expiring Friday Dec 27, 2024), now let’s dive into the ways to trade this weekly option on it’s expiration day. Trading an option on the day it expires is exciting, rewarding, and stressful due to it’s risk. So, in a sense this trade is treated the same as 0dte options on SPY or QQQ.
Trading Apple options is one of my favorites. The stock (imho) is more predictable as the flow is spot on with the technical indicators. Apple options have a healthy amount of open interest and volume in many of their strike prices all week. But, on expiration day the most profit (or loss) can be made.
- Example: If this was day traded on a Tuesday, the best would be a 1.5x or 150% gain. If this was bought on Tuesday and held through Friday the price would most likely be much lower on Friday. That’s how options work, as theta decay is in full effect.
Entry Point:
From the Apple option chart above, a good entry point would have been at the .30 price right around the 7:00 am (pst) mark as the chart indicators were pointing to the downside. AAPL then remained bearish until “lunch hour” east coast time. An opportunity came for call options after that, but they were a bit weak in comparison to the puts, besides the volume really slowed down as the day went on.
Exit Point:
The best overall exit point would’ve been around the 1.87 mark at 9:05 am (pst) deep in the money (ITM). The chart indicators (moving avg, bollinger bands, RSI, CCI) on AAPL were showing signs of a reverse was about to happen. The chart below shows the AAPL morning sell off. Negative divergences were starting to show on the RSI and MACD which meant a reversal was about to happen indicating a good exit point for any puts being held.
This 0dte style of trading AAPL options (PUT) scenario represents a 6.2x, meaning a 620% profit could be made from this 2-hour and 5-minute trade. As the day continued, it started to reverse into a weak bullish scenario. The Apple call options today did not see any any action until that reversal took place. The only real opportunity for Apple calls were at the last 15 minutes of the trading day. Risk was very high, but it was there.
Profit Example:
- 100 contracts bought at .30 ($3,000 investment)
- 100 contracts sold at 1.87 ($18,700)
- Minus $3,000 investment = ($15,700)
- Minus 100 contracts cost at .65 ea ($65 on ThinkorSwim)
- Total Profit: $15,635
Key Takeaways:
- Watch the main chart on Apple, and their option strike price simultaneously, make adjustments or change option strike prices when needed.
- Technical indicators on the Apple (AAPL) chart supersede when trading their option from their main chart like above. (same thing for other stock symbols)
- Keep on eye on Level 2 (Bookmap heatmap shows the buyers and sellers) signaling demand on the ask/bid side (try to stay under 200 as higher = slower fill rate).
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Conclusion:
AAPL and the rest of the market saw a grumpy Santa Claus rally this past Friday. The 5-minute, 15-minute, and 1-hour chart time frames shows the “checklist” scenario with the 1-minute giving key insights for fast in/out scalping. Since Apple (AAPL) is part of the SPY there is still that gap open on the SPY at 576.74 (from November 6th, after the Presidential election). It’s possible more downside is coming to close that gap.
- These types of day trading options on Apple stock can happen almost every Friday when their weekly option expires. Remember, when day trading options the risk/reward is very high. Many opportunities to trade options on expiration day as they have high volatility, liquidity, and open interest. Please understand the risks involved.
If you miss it today, ya might catch it tomorrow…
