Today I added some to my longer term position in AAPL when it gapped down on the open.
I also “traded around” my core position.
AAPL gapped down, bounced back and formed a small base. Not unlike yesterday’s trade in GES, it recaptured the 5MA on two tight range candles. I took a perhaps too aggressive buy on the break of the base, based upon the close of the 6th 15-min bar. AAPL immediately took off, but stalled on the next bar. At this point I was tempted to close the trade for a small loss, as I figured a reversal was happening. However, I remembered something Trader Mike said, and something I used to do, which was not to move your stop for the first hour, so I waited. AAPL created a base upon the original base, on declining volume, the only reason I kept my stop in place after the hour was up. It then formed a third base, and finally started to move up to the top of the range. Then it finally broke out with some volume. My target was the previous days close. I watched it closely at that point (as you can see on the 5-min chart below), and closed it out for a 5.5 R trade.
I also sold calls on the rally, against the longer term AAPL shares I purchased at the open. All my long term AAPL shares have calls written against them.
