The Arena
Well 2022 is officially in the books! I’m not sure what to make of the mess that was 2022 in the market but I’m truly hopeful 2023 isn’t as bad as everyone seems to suggest it will be. That said, the state of the market, at this very moment, isn’t great. I suspect at some point this year we’ll see the inevitable fear based decline to drive prices lower, faster. But who knows when that will come.
For now, the prognosis is bearish. It’s my understanding more retail traders than ever before are continuing to enter the market in the face of 2022’s decline. That stinks of a disaster waiting to happen. Imagine for a second, institutional investing declines further, easy money from the government is a thing of the past, and then the retail masses decide to park their money elsewhere… Doesn’t seem like a recipe for success from my perspective.
In any case, with the market outlook rather bleak, I’ll turn to a tried and true strategy on the bluest of blue chip companies with hope I can turn a small profit while my portfolio continues its march lower.
The Coach
Apple Inc. is down about 35% from its high virtually two years ago and we all know to well how 2022 went. Therefore, I can’t in good faith believe this bear hasn’t left the campsite for good. Let’s hope he didn’t go back to the woods to get some buddies, but I digress. Apple, like most of the market is feeling the pain of expensive money but they are one of the best companies in the world with billions using their products each day. As such, those customers are very likely to continue to maintain their status inside the Apple ecosystem and while the market pushes sits on everything, I suspect Apples moat will weather the storm.
In that light, I’ll be looking at an iron condor on Apple Inc. with an extended expiration and wider than usual short strikes to account for unknown volatility that could present itself at any time. Unlike most trades I make, this one could take a few weeks to play out and meet my profit goal. That said, things don’t look great as I’ve already mentioned so it may be that a neutral outlook is just an opportunity to hand my money to the market. I guess time will tell.
For more on the state of Apple as we push into 2023, have a look at this article from Forbes.com.
The Attack
To get started trading in 2023 I’ll be taking an iron condor position with Apple Inc. The outlook is more grim than normal from this side of the 2023 doorway but to quote my pastor this morning, “we have to keep going”. So I’m going to do just that and get the ball rolling with a neutral position on a typically strong company.
I’ve already completed the order and I’m currently waiting on a fill for a $5 dollar wide iron condor. Should the market sentiment remain, I’m confident Apple will churn out range bound prices over the coming weeks and make a neutral strategy the more advantageous play. That said, its Apple… isn’t that a growth stock? Just saying, trade with caution and manage every risk as we step boldly into the new year. May God bless each of you in 2023!
Bullish assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of 50% Profit |
| 19 MAY 23 100 Put | 19 MAY 23 105 Put | $76.00 | $424.00 | 90% |
Neutral assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of 50% Profit |
| 19 MAY 23 155 Call | 19 MAY 23 150 Call | $161.00 | $339.00 | 85% |
| 19 MAY 23 80 Put | 19 MAY 23 85 Put |
Bearish assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of 50% Profit |
| 19 MAY 23 160 Call | 19 MAY 23 155 Call | $89.00 | $411.00 | 89% |
God Bless,
Jeff
