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Saturday, February 9, 2013

Technical trade (Apple) & Fundamental Trade (ValueClick): playing out as expected

On Jan 24, Apple's shares got crashed with panic sales for that day. I argued however that AAPL was oversold based on the technical analysis and it was due for a rebound. I put the money where my mouth is. The following is a position I had for Apple, a 2 weeks trade with a naked put option. Apple dropped to below $440 on that day and I thought it would rebound to above $450 within the next 2 weeks. So here we are. Yesterday, Apple was trading at $475. The $450 put option expired worthless and I got all the money ($1261) for free. Not a bad deal for just 14 days, I guess.

AAPL FEB 08' 13 $450 Put    Expired   1      $12.7    $1,261.23  100.00%

Now for some trades, we need to look at the fundamentals to see if the trade makes sense. I talked about the seasonality of a company, ValueClick (VCLK), on Nov 18, 2012. Based on its business model and the seasonality of its price action in the past 10 years, I figured that VCLK would likely performance well in the next few months till around end of the first quarter. Again I had a small position with its call options. VCLK was below $18 when I talked about it and it is now over $21, a 17% increase in about 2 months. For my call options, the increase is much more significant and it has doubled actually. I intend to keep it further as it may go up more when it is close to its earnings reporting.

VCLK Mar 16' 13 $18 Call         3.60       5      $1.70    $941.17     109.59%

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