Strategy: Seasonal Short Trade in AAPL

Trades generated by this strategy are available to paid subscribers

The Seasonal Short Trade in AAPL is a short-only, rule-based swing trading strategy that can be used as a hedge or a diversifier for a long-only portfolio. This strategy tries to capitalize on a pattern of seasonally weak AAPL stock returns in periods preceding the quarterly options expiration day, also called Triple Witching Day.

It can be traded on AAPL stock, Apple-related leveraged ETPs like AAPU, AAPD, or options.

This strategy triggers near the market close and typically holds a position for four days. It trades, on average, two times a year.

Some important technical filters are added to this strategy to ensure it's not trying to short a strong rally and also that it's not short selling at a multi-day low.

The P&L chart of this strategy looks as follows (AAPL, no leverage, $100K account):

Strategy statistics:

• Net Profit: 252.82%

• Max Drawdown: 8.03%

• Total Closed Trades: 34

• Percent profitable: 64.71%

• Profit factor: 14.44

Please keep in mind that due to their nature, short-selling of the stock market indices or leading stocks like AAPL is a challenging and risky endeavor, even for seasoned market professionals. Risk-off phases tend to be volatile, chaotic, and unforgiving. Vicious oversold rallies can spark at any time and tend to last longer than most short-sellers can tolerate. Due to the above, TradeMachine authors prefer to size such trades relatively small and opt to use options.

TradeMachine subscribers receive email alerts with position updates each time this strategy enters or exits a trade. Some strategies include take-profit and stop-loss price levels.

Past performance is not indicative of future results. Results based on simulated or hypothetical performance have certain inherent limitations. All posts are subject to the disclaimer on the About page.