Using ATM (at-the-money) volatility there is a 63% probability of this trade retaining the max credit collect, $2,560.
At Top Gun Options our risk management ROE (rule of engagement) is to never risk more than 5% of our Primary Model Portfolio on any one trade. Using our $100,000 virtual account, this equates to $5,000.
As the "pilot in command" of the Portfolio, I am comfortable being just slightly north of our ROE.
Threats to Success: Earnings next week on 24 April. Apple tends to "under promise and over deliver" but our short strikes are well outside the historical moves the stock makes around earnings. Additionally, Apple could unveil something new in the next month that is not already factored into the current stock price.Eject Criteria: We plan on letting this trade expire worthless and collecting the max credit in the Primary Model Portfolio, or we will manage the trade according to our Midcourse Guidance. As always at Top Gun Options, we eject from the trade if our Commit Criteria change.
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