On Monday, March 21, 2016, I was trading and teaching in the Simpler Options Live Trading Room. For those of you who don’t know, the Simpler Options Live Trading Room is an online trading room, where we have moderators, like me, who share their charts and trade live in front of our community of traders.
One of the trades I had mentioned was that a short in AAPL was ready to fire. What did I mean? AAPL is notorious for selling off during one of their big product “events”. BUT, the caveat is that the stock needs to rally INTO the event. Yesterday AAPL ended up setting up perfectly. AAPL had rallied from around 100 in the last week. (see chart below)
THE 2 KEYS TO THE AAPL EVENT TRADE
- Short the stock DURING the event, while Tim Cook is speaking.
- “Wait for the break” trade. I discussed this at length at my last week’s day trading class.
As seen on the 5 minute chart, the first break of the ATR trailing stop was right before Tim Cook took the stage.
The key was to wait for the 2 minute to get back above the zero line, and the price to break again below the ATR trailing stop. That was at 106.20. I shorted 100 shares at 106.20. Within 10 minutes, I bought back the short at 105.30. This is a quick “event” trade. Usually, you’ll notice, the next day, the brokerage firms that help AAPL float bonds come in and recommend the stock.
You can see more of Chris Brecher's live trade setups, market analysis, and commentary at Simpler Stocks.