What to do with 2011 250 Leaps

  • Posted: 29 December 2009 01:44 PM

    Hi guys, it’s been a while since I’ve posted here and apologize in advance if I’m posting in the wrong thread. My wife and I own separate posns in AAPL. She owns shares and I typically own calls. Her cost basis is in the 70s and she’s holding on long term. I on the other hand watch this stock daily and have been selling my calls either too soon or too late. Anyway, I currently hold 20 2011 250 Leaps worth $16.25 currently. The first 10 bought at $11 (back in Sept when AAPL was at $170) and the 2nd 10 bought last month at $15 (when AAPL wss at $197). Yesterday, the leaps got up to $18.75 and I was tempted to sell but remembered my previous premature sales.

    Part of me is saying…ignore the fluctuations and AAPL will be over $250 mid-year and part of me says, sell now and buy back in later. I know there’s no crystal ball but would love to get your thoughts on how these Leaps should be handled.

    Thanks!

         
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    Posted: 29 December 2009 01:50 PM #1

    You should do a little research on implied volatility which can have almost as much weight in buying / selling a call as does stock price.  Right now IV is really low and options are cheap.  Spend a little time researching that and time decay (you can see how time decays versus time and right now time decay is not moving very fast).  Few things to help you decide what’s best for you to do.

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    Posted: 29 December 2009 02:03 PM #2

    Speaking of IV, it will probably rise moving into the “event” in late Jan, with a probable drop immediately afterward.

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