Sold a vertical call spread on AAPL

AAPL looks ready to dip, so I sold a vertical Aug 130/140 call spread for $8.78. My target is for AAPL to drop to 130-135 in the coming month.

Notice the clean 5-wave rally. Wave-5 was espcially nice because it shot up straight to the descending trendline in one quick spike with no retracement, which means the retracement should be equally swift. I'm comfortable shorting here because trendlines are rarely broken on the first pass. I think 130-135 should provide decent support because this region is the Wave-4 low.


MrTrader said...

Whats your rationale behind selling the call spread rather than buying the corresponding put spread? I'm guessing Open Interest but am I missing anything else?

Narayana said...

No specific rationale, was just a cheap bearish position.