CLOSE: AAPL Dbl Diagonal +12.4%

Because of my protective put (Oct 160) I placed on my AAPL double diagonal last week, I have been able to turn a completely losing trade to a 12.4% winner! This a new concept for me (taught to me by my friend and mentor Mojo at www.insanemoney.com.

What's cool about it is that as you see a stock starting to turn in a direction (while you're in a non-directional trade) you can quickly cut losses and neutralize the trade without exiting for a loss by simply adding either protective puts or calls. As you could see on the graphs in my posts from 9/2 & 9/8, my profit curve on the left side swung upward so as the stock were to tank on me, I lock in profits even if the stock is now outside of my breakeven on my double diagonal.

So this afternoon at 2:15pm EST, the FOMC announced that the Fed rate would not change. The market freaked out anyway and tanked for a short while. This helped me with AAPL as it dragged AAPL down with the market. So I watched it and quickly scaled out of each leg in my trade one at a time. I was able to capture $14,292 of profit just today alone.

I am still learning this method so it may not all be perfect, but i just know that for this trade it worked!

ADJUST: AAPL Dbl. Diagonal

To neutralize my deltas again, I added:
BOT AAPL 100 SEP 08 160 PUT @ $6.00 debit

What this does is raise my profit curve on the downside so if AAPL continues downward quickly, I can regain profits on the downside. If AAPL heads back up then I would simply remove these protective puts. See the chart below...

ADJUST: AAPL Dbl. Diagonal

On 8/21/08, I started out with a double diagonal as follows:
BOT DBL DIAG AAPL 100 OCT 08/SEP 08 190/160/185/165 CALL/PUT/CALL/PUT @ $3.36 debit

Today, my analyze graph below showed that it has shifted downward on my profit scale and my delta exposure is high:

BOT AAPL 100 SEP 08 165 PUT @ $4.95 debit
SOLD AAPL 100 SEP 08 160 PUT @ $3.05 credit
SOLD DIAGONAL AAPL 100 OCT 08/SEP 08 190/185 CALL @ $1.66 credit

Therefore I "calendarized" 10 contracts of my 160 Sep puts by selling 10 of 165 puts and buying 10 of 160 Sep puts & lowered my upper call diagonal down to 180/185 Sep Oct diagonal. This also lowers delta from 970 to 685 and decreases margin by $1500. This also lowers my breakeven a bit to give me some cushion on the downside.

Here's what it looked like after the adjustments:


Today, I also added the following to center/balance the mark between my breakevens:
BOT +52 DIAGONAL AAPL 100 OCT 08/SEP 08 185/180 CALL @ $1.88 debit

AAPL Dbl.Diag. Sep/Oct 190/160/185/165

BOT DBL DIAG AAPL 100 OCT 08/SEP 08 190/160/185/165 CALL/PUT/CALL/PUT @ $3.36 debit