Options Strategy (Archive)

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    Posted: 04 September 2011 03:56 PM #16

    lovemyipad - 04 September 2011 05:54 PM

    ... There are many ways to effectively pay yourself a cash or stock dividend on AAPL.  Covered calls are my LEAST favorite. wink

    Your most favorite?

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    Posted: 04 September 2011 04:39 PM #17

    Mace - 04 September 2011 06:56 PM
    lovemyipad - 04 September 2011 05:54 PM

    ... There are many ways to effectively pay yourself a cash or stock dividend on AAPL.  Covered calls are my LEAST favorite. wink

    Your most favorite?

    Mace, it’s not socially acceptable to admit on AFB—lest my buds hurl tomatoes (or worse) at me. :(  But if you look at any Intraday chart the day after earnings, you’ll see what many do.

         
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    Posted: 04 September 2011 05:39 PM #18

    lovemyipad - 04 September 2011 05:54 PM
    StillLong - 04 September 2011 01:59 PM

    So many choices.  The variety of options plays is almost overwhelming.

    Indeed! smile

    If you haven’t already, do get your hands on OPTIONS FOR THE BEGINNER AND BEYOND by W. Edward Olmstead.

    For myself, I have almost always regretted every covered call I ever sold (short call/long stock).  While you may *think* you would be fine parting with your stock at whatever strike price, to actually *watch* that stock price soar higher after you’ve capped your return by selling that call…ugh.

    There are many ways to effectively pay yourself a cash or stock dividend on AAPL.  Covered calls are my LEAST favorite.

    Read the Olmstead book. wink

    ahhhhh!!!!  another book I have to buy now!!!

    I have an awesome library I’m building now though..  its really cool actually.  I just started reading Corey’s book, as in JUST started, so I cant comment on it.

    What I CAN comment on is Jason Schwartz’ book “the alpha hunter”.. that’s the last one I just finished.  Awesome…  VERY good commentary and insight/ideals on China at the end of the book too.

         
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    Posted: 04 September 2011 05:45 PM #19

    StillLong - 04 September 2011 01:59 PM
    lovemyipad - 04 September 2011 02:21 AM

    Still Long, you can mix and match any way you like.  It’s like rock-paper-scissors:

    100 shares cover 1 short call (covered call)
    1 long call covers 1 short call of a higher strike (bull call spread)
    1 long call, all alone = unlimited potential upside
    100 shares, all alone = unlimited potential upside

    Got it, thanks.

    I tend to agree with Blaze, I’m not willing to put 100 shares on the line right now, at this time of year.  The holiday run-up seems too promising to me.  BUT:

    I’ve held most of them since 2006, the majority bought for $60, some for much less.  And I have zero to show for them since aapl doesn’t pay a dividend.  I started looking at options in the first place because I’ve got nothing but paper profit after holding for 5 years.

    So I’ve been thinking about covered calls after the holidays, if aapl is around 425 and the stock might settle down or even get pushed way down like it did this past year.  With the hope of then selling some puts to get back in later.

    So many choices.  The variety of options plays is almost overwhelming.

    you could always throw on a nice little spread.. and just leave those shares alone..

    You can also decide how much (to a degree) you want to spend.  You can buy some spreads for $250, $500, $1000, $750, $2000, etc.  Anything right at the money will just about double.  I personally would rather have 10 point spreads than have, say…  20 points or even 30 points.  If you have 2 10 points (or 3 10 points) then you can peel them off at a profit as you feel like it.  Whereas if you only had one 20 point or one 30 point, when you sell.. your done.  sort of.. lol.

    MANY many choices..

         
  • Posted: 04 September 2011 07:01 PM #20

    Blaze -

    Your previous comment about insurance on my aapl shares was interesting.  I’ve been thinking about that, I’ll be thinking about that for a while.  But I don’t think I’ll start buying puts to insure it in the near future.  I think that tells me how long I truly am.  aapl has so many things going for it right now. 

    Sounds like lovemyipad sells going into earnings or right after?  I haven’t had the nerve.  I keep thinking it’s going to run as soon as I do something like that.

    I read the “Look Inside This Book” at Amazon for the book you suggested lovemyipad.  The included part was pretty basic but easy to read.  Every options education site I read is heavily focused on the positive, for obvious reasons.  You have to dig a little to find the potential pitfalls.  Anyway, the book is in my shopping cart.

    I think you all have answered enough of my questions for now.  I’m sure I’ll be back with more.  Many thanks.

         
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    Posted: 04 September 2011 07:34 PM #21

    StillLong - 04 September 2011 10:01 PM

    Blaze -

    Your previous comment about insurance on my aapl shares was interesting.  I’ve been thinking about that, I’ll be thinking about that for a while.  But I don’t think I’ll start buying puts to insure it in the near future.  I think that tells me how long I truly am.  aapl has so many things going for it right now. 

    Sounds like lovemyipad sells going into earnings or right after?  I haven’t had the nerve.  I keep thinking it’s going to run as soon as I do something like that.

    I read the “Look Inside This Book” at Amazon for the book you suggested lovemyipad.  The included part was pretty basic but easy to read.  Every options education site I read is heavily focused on the positive, for obvious reasons.  You have to dig a little to find the potential pitfalls.  Anyway, the book is in my shopping cart.

    I think you all have answered enough of my questions for now.  I’m sure I’ll be back with more.  Many thanks.

    You could always buy some really out of the money puts..  like the Jan 12 (or 13) 300’s or so.. 

    buying insurance is not saying that you don’t like apple or you don’t believe in it.  Just like buying insurance on a $75,000 BMW is not like saying your planning on crashing it or having it crashed INto..  it’s a ‘just in case’, so you can sleep at night.  You’ll know that no matter what, your stock is protected at 300 down (minus the premium paid)..  which is going to be $60,000 (Obviously).

    I think most people are reluctant to purchase it when things are going good, but they sure the hell wish they would of when the doodie hits the fan.. like it did in 2007/2008. 

    RIMM is CERTAINLY not apple..  but anyone that would of protected their RIMM stock would be happy now.. (but what I would of done is got the stock certified and then used the papers for coasters.. and then when I ran out of my weekly copy of Barrons-Doodie-Wipes I would of used the stock certificates..  but hey.. that’s just me!)

    smile  have a good day!

    ps -  just a little editing so my genius is not lost admiss all of the ‘haves’ and ‘of’s’ in improper places..

    [ Edited: 04 September 2011 07:37 PM by blaze biscuits ]      
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    Posted: 04 September 2011 07:36 PM #22

    Wait, what?

    Now _I’m_ the thread creator for Options Strategy?

    I play options, sure, but I don’t have any strategy!  Ah, fun things happen when threads get broken up like the Baby Bells.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 04 September 2011 07:39 PM #23

    Mav - 04 September 2011 10:36 PM

    Wait, what?

    Now _I’m_ the thread creator for Options Strategy?

    I play options, sure, but I don’t have any strategy!  Ah, fun things happen when threads get broken up like the Baby Bells.

    Your ARE the master of our option universe!!!

    now I must go listen to “symptom of the universe” by black sabbath!!

    EDIT: i know i’m not ‘supposed’ to say this.. but I seen him in an AA meeting once in Los Angeles..  he was a few rows in front of me and I didn’t know it until he stood up and said his name.. lol.

    just a little tid-bit of info that does NOT belong here!! 

    BAD BLAZE!!!  BAD, BAD, BAD BLAZE!!!

    ahh.. I was never one for rules anyways..

         
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    Posted: 04 September 2011 07:40 PM #24

    By the way, depending on how AAPL’s trading after fiscal Q4 earnings I may actually look into things like Apr 12 puts if I sense there might be some temporary AAPL downturns.  Might be a good way to capture some small gains/hedge just a little, and then I’ll hop out before the Santa Rally, should we have one.

    I’d have to see some serious P/E expansion first, though.  AAPL is amazingly cheap and with a very conservative $8 EPS for this quarter, that drives down the P/E to 13 at Friday’s price.  Not, happening, unless some serious stuff goes down before iPhone 5 gets going.

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 04 September 2011 07:42 PM #25

    Mav - 04 September 2011 10:40 PM

    By the way, depending on how AAPL’s trading after fiscal Q4 earnings I may actually look into things like Apr 12 puts if I sense there might be some temporary AAPL downturns.  Might be a good way to capture some small gains/hedge just a little, and then I’ll hop out before the Santa Rally, should we have one.

    I’d have to see some serious P/E expansion first, though.  AAPL is amazingly cheap and with a very conservative $8 EPS for this quarter, that drives down the P/E to 13 at Friday’s price.  Not, happening, unless some serious stuff goes down before iPhone 5 gets going.

    apple is one of the best pieces of ‘paper’ that one can buy..  I feel bad for the.. uh.. “intelligence-challenged” that see the stock as ‘expensive’ due to its almost-400-handle.

    I’m about to buy some shares for my mom in her IRA.. as soon as she puts some more gravy in for me to play with!!!

         
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    Posted: 04 September 2011 07:49 PM #26

    Check your trade queue this time around.  wink

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 04 September 2011 07:51 PM #27

    blaze biscuits - 04 September 2011 10:39 PM

    EDIT: i know i’m not ‘supposed’ to say this.. but I seen him in an AA meeting once in Los Angeles..  he was a few rows in front of me and I didn’t know it until he stood up and said his name.. lol.

    just a little tid-bit of info that does NOT belong here!! 

    BAD BLAZE!!!  BAD, BAD, BAD BLAZE!!!

    ahh.. I was never one for rules anyways..

    This raises all kinds of questions.  Like,

    You saw Ozzy Osbourne?

    And what the heck were you doing at an AA meeting?

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 04 September 2011 08:26 PM #28

    Mav - 04 September 2011 10:51 PM

    This raises all kinds of questions.  Like,

    You saw Ozzy Osbourne?

    And what the heck were you doing at an AA meeting?

    Sorry..  that was unclear..  Yes, Ozzy Osbourne.

    And “my name is Blaze Biscuits and I am an alcohoic”

    “HELLO BLAZE!!!”  lol.

    I have been sober over 5 years now though.  I don’t even smoke cigarettes or chew anymore.  But only two years on the cig/chew

    ps - now i HAVE to be annonymous on the thread!!!  damn!

         
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    Posted: 04 September 2011 09:03 PM #29

    For an investor who is willing to hold shares for more than 10 years and believe that AAPL would trade at $1000 within 10 years regardless of macro development, what kind of protection do buying puts offer?  If buy puts, which puts, once-off or roll forward continuallly till shares are sold?

    IMHO, buying puts is in fact trading unless we think AAPL would go into a permanent* decline because of a Black Swan.

    *So long there is a chance that the price would be lower than now at the point when we want to sell, decline can be considered to be permanent.

    My point is unless you are willing/planning to sell the shares, any options should not be associated to the underlying.  For example, selling calls against underlying with no intention to sell underlying is in fact selling naked calls.

    Note: I am challenging what are said in options trading literature and taught by option trading trainers.  I don’t like how these guys present the materials.

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    Stay Hungry. Stay Foolish.  - Steve Jobs

         
  • Posted: 04 September 2011 09:07 PM #30

    Mace - 05 September 2011 12:03 AM

    For an investor who is willing to hold shares for more than 10 years and believe that AAPL would trade at $1000 within 10 years regardless of macro development, what kind of protection do buying puts offer?  If buy puts, which puts, once-off or roll forward continuallly till shares are sold?

    IMHO, buying puts is in fact trading unless we think AAPL would go into a permanent* decline because of a Black Swan.

    Nicely put.  My time horizon is much shorter but the same idea holds.  I think AAPL will move higher to realize solid gains before expiration of my straight calls.