The Opportunity Cost of Shorting Apple

It’s been a while since I posted an Apple trade on here.

AAPL is a stock that moves far and fast. It’s not for the faint hearted, but when you get to know it you find that actually, beyond the very short term whipping about, it moves as predictably as any other stock.

The high price can be something that puts off a lot of traders, which is understandable, but it’s not a reason not to trade the stock. Here I traded 1000 shares, giving $880 profit in ten minutes (exiting when it failed to hit the target — just!) But a smaller account could trade 500 shares, or even just 250, which would still have yielded $220. Sizing our position in relation to the price of the stock is one of the great advantages of trading stocks over futures.

But that’s not the whole story of this trade. We need to look at another trade I took on BZUN:

This was another ten minute short, taking a clear entry and exiting when it just kind of petered out. In relation to the price of the stock, this trade was way more profitable than the Apple one above. Had I not had cash tied up in Apple, I could have increased my size four-fold on this one, turning a $450 profit into an $1,800 one (as opposed to $1,320 for the two trades combined). So actually that seemingly nice Apple trade actually cost me $480 in lost profit. Opportunity cost is real.