Bitten by ASPS?

Am paper trading ASPS this morning. I have been watching this stock for awhile as a potential breakout short candidate. This might be interesting since it can be hard to "fight the tape" in other words short a stock, or take a bearish position in a bull market which this market is. As you can see from the above chart courtesy of FreeStockCharts.com ASPS broke out of its Cash-In-The-Box on a big volume spike yesterday. So this morning we shorted the stock at the open.for approximately $73.00. We are looking for the stock to move down 5% to $69.35 which is our target price.

If you wanted to play this move using options you would select an April or May Put option at or close to the money which last night was the closing price of ASPS was $71.80 so you would have probably picked the April $70 Put for this morning's opening. Placing the contingency order to buy the Put at market if the stock traded at or below the support line price of $74.75 or less.

 This morning's Put would have been purchased at $2.20.There is a horrendous spread on this stock's current month's options of about 90 cents. So right now the Put's bid price is still under water at $1.80 even though the Ask price has moved up to $2.70 already since the stock is already down $1.50 from the open. Remember Puts increase in price if the underlying stock's price falls. If the stock hits its target the option bid price would be about $2.73 according to the option price calculator at OptionsXpress .BTW you can sign up for free at OptionsXpress and use all of their tools, charts and give their Virtual Trading program a try if you've never traded before. This gives you the real hands on experience and is a great way to keep track of your paper trades in simulated reality which is handy even if you have traded before. Virtual Trading is listed under the Toolbox tab at OptionsXpress.