About Me...

Prior to 2008, I was a “buy and hold” investor and followed the wisdom of the “professional” analysts.  This had worked well for many years and my investment portfolio was a mix of mutual funds and individual stocks.  

 

For most of 2008 I was holding up pretty well - far better than the broader markets.  Then near the end of 2008 I made the wonderfully insightful decision to invest in various financial stocks.  I was listening to “professionals” touting these stocks as “severely undervalued” and at “bargain prices”.  These companies were “too big to fail”.  Well, we all know how that worked out.  I was devastated.  I had lost a substantial portion of my investments I had worked so hard to build.  

 

After some soul searching and a period of beating myself mentally, in 2009 I decided to take control of my investing and no longer follow the “professionals”.  I wanted to find some safe, consistent investments to re-build what I lost in 2008.  I began to slowly learn about options.  First some simple covered call strategies and some option dividend strategies.  Then tried some monthly Out of The Money (OTM) calls -- made money / lost money.  Learned quickly that OTM options were pure gambling and the sellers make most of the money, not buyers.  In late 2009 and through 2010 I progressed to buying long calls and began to focus on one company I had invested in for years.  I had also been a loyal customer of this company and knew it very well.  I am of course referring to Apple.  

 

The long call strategy worked pretty well and I was slowly rebuilding my wealth.  However, there were a few months where I would lose ground and I questioned whether it was luck versus investing skill.  I decided to learn more about Apple’s trading patterns especially after the introductions of weekly options the second half of 2010.  I also began to notice how Apple had a very strong upward pattern about a month before earnings.  I “paper traded” some more aggressive DITM calls for October 2010 pre-earnings and saw how profitable that could have been.  I then used “real” funds in January 2011 and had a great month.   This was working well.

 

As always, once I thought I had figured it out, the market changed on me.  As German military strategist Helmuth von Moltke stated, “No battle plan survives contact with the enemy.”  The market is the enemy and you need to constantly change your investment “battle plan”.  Apple traded sideways from January 2011  to April 2011.  A DITM call strategy would not work in a sideways market due to time decay.  I once again went back to “school” (internet / books from library) to re-educate myself on ways to make money in a sideways market.  This is when I learned about spreads -- a way to make money if the stock had small movements up, down, or no movement at all.  I began to trade some spreads in March/April 2011 and they helped offset the losses in some DITM calls (July calls purchased in March) I was stubbornly holding.  Those DITM calls were getting killed by the Japan quake and then NASDAQ rebalancing.  However, I was impressed with how well these spreads were working.  I knew I could combine my analysis of Apple price movement before earnings with the spread strategies to set up for a strong July 2011.  I opened some spreads a little early in June and also had further declines in the July DITM calls with Apple’s dip in June.  However, I was still confident in the July 2011 pre-earnings run and I held my positions.  

 

July 2011 was a great month where the planning paid off.  I took my gains before earnings to lock them in - had such a strong month, why risk the gain on a 1-day event.  I knew there was less consistency in how Apple moved after earnings so I needed to work on a strategy that would fit post-earnings.  I was also concerned with the US and global economic concerns.  This is when I decided to set up some rules for trading weekly options Monday thru Friday and then stay safely in cash over the weekends.  I analyzed how Apple had historically moved over each week since the weekly options began in June 2010.  

 

The weekly spread strategy and aggressive pre-earnings strategy worked perfectly.  Small consistent gains after July earnings until early September.  Begin setting up pre-earnings positions in September.  Reap the rewards of the pre-earnings move in October.  The same set-up worked in the most recent quarter:  Small, consistent, gains after October earnings until early December.  Then set up for the January pre-earnings move for the bigger gains.

 

The most interesting part of my story...  the mistakes of late 2008 were the best thing that ever happened to me.  What I thought at the time was the worse investing experience of my life was actually the beginning of an incredible new investing journey.  Had I not suffered those significant losses, my portfolio would be slowly limping back to where it was in mid-2008.  I never would have forced myself to learn new strategies.  

 

As you can see, I am no long-term options expert.  I am fortunate that I am analytical and love to take raw data and make sense out of it.  I am also fortunate that the company I chose to focus on is probably the perfect candidate for weekly / monthly options due to the high volume of contracts traded.  As they say, “all the planets were aligning”.  

 

As my journey progressed, I decided to share what I was learning.  I saw many “floundering” on investment boards -- complaining about things going wrong and never learning as these events repeated themselves.  I shared what was working and what did not work -- learning from mistakes is a powerful tool.  This led me to setting up this website to share my data / strategies and to start a forum to share ideas.  

 

My wife, fondly known at home now as ATTW (Apple Trader Trophy Wife), would ask why I spend so much time helping others with investing.  The main reason is that is just who I am.  I will always drop what I’m doing to help someone else.  My educational background is a Bachelors in Special Education and a Masters in Business Administration.  I had the choice to teach and reap greater internal rewards or enter the corporate world and reap greater financial rewards.  I chose the corporate world for 21 years and in Feb 2012 I “retired” at age 47 to focus on my trading and helping others.  I can now fulfill the other path, help teach others to be better investors, and reap the internal rewards.  An example of this is an e:mail I received on March 18, 2011, a few days after the earthquake in Japan:

 

Hello Apple Trader,

I just wanted to thank you for providing a link to your extremely useful and dedicated Apple trading site. I was really impressed. I'm an American English teacher living in Tokyo, Japan since 2007.  With the recent earthquake, power outages and radiation threats, I'm lucky to be alive and need to seriously think about my future and getting back to the US eventually.  I think trading Apple can help me secure my financial future.    I lost thousands trading OTM same month options, it's so tempting to get cheap options and hope for a big win, but I only get those big wins maybe 10% of the time, and I would like to be on the 80% winning side. For the past four years, I have not been able to get ahead because of buying too many OTM same month options. I appreciate your generosity in putting together this site for so many of us traders that are blind.  I hope to turn around my losing streak soon.

 

I have received many e:mails from people who are more confident in their financial future after learning some of the safer option strategies that have worked for me.  This is why I do this.

 

 

2014 update:  I had to change my “battle plan” in 2013 after AAPL had its big drop late 2012 into 2013.  In my prior career (insurance marketing / underwriting) we had to continually “test and adjust” our marketing and pricing strategies.  This is a tactic that has served me well in my investing success.  2013 was a big year of “testing and adjusting”.

 

I continue to focus on deep BuPS with AAPL but began trading other stocks such as GOOG, PCLN, NFLX, AMZN, etc. based on some technical chart patterns.   I also looked for other strategies that paid off on these stocks with movements either direction.  Finally I began to trade options on SPX... has advantages being an index with less catastrophic risk along with some tax advantages.

 

Happy Investing!!!