Markets still in downturn, trade idea on AAPL

The markets continued their trek downwards after the FED announcement. If you bought the puts as suggested, you would feel relieved for now. EFA on the other hand is in danger. It is close to it’s stop loss point, but we won’t exit the position until the stock closes below the stop loss point. This is where buying options helps you sleep at night as you know your total potential loss, even if the stock suddenly takes a big drop. This psychologically helps you stay in a position longer, in case the market is playing a shakeout.

AAPL on the other hand showed remarkable strength and is showing an upward trend for now. A good play would be to buy the Apr’21 146 AAPL call. The stop loss would be if AAPL closes below 146.25.

Many traders fall into the trap of wanting to be right, rather than wanting to make money. This can lead to emotional decision-making and a tendency to hold onto losing positions for too long, all in the name of being "right." You want to hold only till the time your system says you to hold and in our case it is closing below the stop loss point. At The Free Trader, we believe that making money should always be the primary goal.

To recap we’re still looking at the following directionalities:

• SPY: down-trend.

• EFA: up-trend.

• AAPL: up-trend.

Disclaimer: We’re long EFA and AAPL.

Disclaimer:

The content on this site/newsletter is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, consult a licensed financial or tax advisor.