Options Strategy (Archive)

  • Avatar

    Posted: 04 September 2011 10:42 PM #31

    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?

    Well…my thought is…if you don’t care about the stagnant and retrace periods along the way, and you are plenty content with the projected “averaged annual returns” over whatever long-term timeframe, then by all means, don’t worry about maximizing your returns.  Buy AAPL on the next trading day at whatever price and go play golf.

    In answer to which puts: once-off, like the ones you bought the other month.  For those “known” periods in time when business cycle or economic risk is particularly high, such as a global banking crisis, an economy potentially on the brink of a bear market/recession, etc.

    But again, if these things don’t affect you, then you’re absolutely right, Mace: why bother?  Unplug, go outside, watch the garden grow, enjoy the simple pleasures in life. smile

    [ Edited: 04 September 2011 10:44 PM by lovemyipad ]      
  • Avatar

    Posted: 04 September 2011 11:43 PM #32

    From Weekend Updates:

    blaze biscuits - 04 September 2011 02:41 PM

    I’m going out into October though with these.  I currently have the SEP quarterly 117/110 spreads that I’m selling when it hits 110.  I want another few sets of backups to not sell and hold on to.. 

    What is in YOUR lunchbox?  lol

    Like Blaze, I’m generally hedging with SPY at the moment, as the broader market is a greater concern to me than AAPL…and I’ve been taking short-term downside profits and plowing them into long-term AAPL holdings.

    In my lunchbox, I have packed for Tuesday:

    Intact spreads I will unload before expiration:
    SPY SEP 107/108 (put bear spreads - zero cost basis)
    SPY SEP 109/110 (put bear spreads - zero cost basis)
    SPY OCT 121/124 (put bear spreads @ 1.29)

    Work-in-progress:**
    Mix-and-match SPY SEP puts (can be bull or bear spreads):
    Long:  120,124
    Short: 118, 119, 122, 123 (NOTHING uncovered)

     

    **HIGH RISK strategy.  Please do NOT attempt this unless you are very, VERY familiar with options trading.

    [ Edited: 04 September 2011 11:57 PM by lovemyipad ]      
  • Avatar

    Posted: 04 September 2011 11:55 PM #33

    lovemyipad - 05 September 2011 01:42 AM

    In answer to which puts: once-off, like the ones you bought the other month.  For those “known” periods in time when business cycle or economic risk is particularly high, such as a global banking crisis, an economy potentially on the brink of a bear market/recession, etc.

    When the RSI gets to 90+...

         
  • Posted: 05 September 2011 12:59 AM #34

    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.

    Periodically we do “refresh” topics with pages of residual entries. Your post seemed like the best place to start the new topic.

         
  • Posted: 06 September 2011 10:16 AM #35

    lovemyipad - 03 September 2011 10:12 PM
    StillLong - 03 September 2011 07:14 PM

    Getting back to options here:

    One of the things I’ve been reading about is bull call spreads.  And it got me thinking about a slight variation:

    If you held shares of aapl would it not be similar to a bull call spread to:
    1. buy a call at strike price x and then
    2. sell covered calls at a strike price greater than x to offset the premium on the purchased call? 

    Unless I’m way off it seems like some of the benefit of a bull call spread but since the call you’re writing is covered your upside is unlimited.  I googled all over for a description of a similar play and found nothing.  which makes me think there’s something wrong with this idea.

    My thinking is that if you’re willing to part with some of your underlying shares at a given price this is worth considering.

    And just to put one more interpretation on your scenario…  This is analogous to “legging into” a bull call spread, where yes, ideally, you sell the short leg (higher strike) for an amount greater than the price you bought the long leg (lower strike); so essentially you have nothing invested in the spread.

    If you simultaneously hold shares, yes, either the shares OR the long call will cover the short call; so either the shares OR the long call will have unlimited potential upside.

    IfI have the JAN2012 call unhedged when should I buy the short now expecting a dip or wait at high to collect money

         
  • Avatar

    Posted: 06 September 2011 12:52 PM #36

    From the intraday thread:

    Mercel - 06 September 2011 06:15 AM

    In the “we can dream” vein, Travis over at Max. Pain fame is giving AAPL a 98% probability that it trades between $395 - $435 as of Sept. 2, 2011 for Sept. 16 options.  What am I missing here, aside from the fact it will likely be updated tomorrow?

    http://www.aaplpain.com/Site/Aapl_Pain_Sep.html

    He’s reporting the strikes with the highest open interest, because his table of the past 62 weeks shows 80% of the time AAPL has finished the week between the strike with the highest put OI and the strike with the highest call OI. Recent history has brought this percentage down from 86% to 80%. Expanding the range by one strike on both ends raised it to 98% of the time, but Travis may need to update his site because I think recent history has actually brought this down to 95%.

    But September monthly has one weird aspect to it—max pain is $390 which is below both the 80% and 95% ranges. Although Travis doesn’t post the actual max pain number, it’s usually within the range. FWIW.

    Signature

    The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. — Steve Jobs

         
  • Avatar

    Posted: 06 September 2011 01:12 PM #37

    Links to the archived portions of this thread:

    Options Strategy Archive 1

    Options Strategy Archive 2

    Signature

    The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. — Steve Jobs

         
  • Avatar

    Posted: 06 September 2011 02:47 PM #38

    Reminder: 2014 LEAPS listing on Monday

    Roman - 27 July 2011 06:23 PM

    2014 LEAPS will be listed on September 12, according to OIC. (AAPL is Cycle 1).

    I’m starting my long-term planning. Anyone have targets in mind? Calls or spreads?


    Last year they went on Sep 13th, with extra strikes added in the following several days. I bought a single Jan’13 $400 call (sadly, a tiny investment since I was out of funds) on 9/15 for $20. It hasn’t traded that low since then, though it did go below $25 on June 20 (current price near $60). Right now it looks like a decent potential for a fire-and-forget 10-bagger (with the usual caveats of “fire-and-forget” such as market meltdowns, Steve Jobs health, debt ceilings, etc)

    With AAPL’s ‘coiled spring’ remaining steadily coiled, and seeing that I will have much less time to jump in and out of market in the next two years, I plan to rely on 2014 LEAPS more than other options.

    Would be interested in anyone’s thoughts and strategies.

    P.S. This was my 666th post—a good omen perhaps for the 2014 LEAPS, as $666.66 was the price of the Apple I

    [ Edited: 06 September 2011 03:28 PM by Apple II+ ]

    Signature

    The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. — Steve Jobs

         
  • Avatar

    Posted: 06 September 2011 08:03 PM #39

    hfnaanouh - 06 September 2011 01:16 PM

    If I have the JAN2012 call unhedged when should I buy the short now expecting a dip or wait at high to collect money

    So sorry, but I can’t answer this for you.  Gets back to that whole “what do YOU expect the market to do next?”

         
  • Avatar

    Posted: 06 September 2011 08:56 PM #40

    Apple II+ - 06 September 2011 05:47 PM

    Reminder: 2014 LEAPS listing on Monday

    Nice. Going to look into some TBT call spreads (52-week intra-day low today!), and of course some AAPL’s.

    Signature

    We filed for over 200 patents for all the inventions in iPhone and we intend to protect them. — Steve Jobs, 2007

         
  • Avatar

    Posted: 07 September 2011 01:03 AM #41

    JDSoCal - 06 September 2011 11:56 PM
    Apple II+ - 06 September 2011 05:47 PM

    Reminder: 2014 LEAPS listing on Monday

    Nice. Going to look into some TBT call spreads (52-week intra-day low today!), and of course some AAPL’s.

    I usually just follow AAPL leaps, but have recently been thinking along the same lines, so I jumped over to see what’s beingdiscussed. I have no idea how interest rates have stayed so low while they print so much money.
    I;d be interested in he range you are looking in, or if you could direct me to archived messages on puts on YBY

    Signature

    The more I learn the higher I go,
        The higher I go the more I see;
    The more I see the less I know,
        The less I know the more I’m free.

         
  • Avatar

    Posted: 07 September 2011 01:20 AM #42

    Apple II+ - 06 September 2011 03:52 PM

    From the intraday thread:

    Mercel - 06 September 2011 06:15 AM

    In the “we can dream” vein, Travis over at Max. Pain fame is giving AAPL a 98% probability that it trades between $395 - $435 as of Sept. 2, 2011 for Sept. 16 options.  What am I missing here, aside from the fact it will likely be updated tomorrow?

    http://www.aaplpain.com/Site/Aapl_Pain_Sep.html

    He’s reporting the strikes with the highest open interest, because his table of the past 62 weeks shows 80% of the time AAPL has finished the week between the strike with the highest put OI and the strike with the highest call OI. Recent history has brought this percentage down from 86% to 80%. Expanding the range by one strike on both ends raised it to 98% of the time, but Travis may need to update his site because I think recent history has actually brought this down to 95%.

    But September monthly has one weird aspect to it—max pain is $390 which is below both the 80% and 95% ranges. Although Travis doesn’t post the actual max pain number, it’s usually within the range. FWIW.

    I would be (and will be) looking for any move to be telegraphed via option volume..  if its going to run up into 420/430-ish..  your going to see some massive call buying..  and I’ll be waiting for that and tagging along with it.  Not until then.  Although, I have a bunch of 370/380 spreads I bought this morning, but they are OCT’s..

    I’m waiting for that volume to come in..

         
  • Avatar

    Posted: 07 September 2011 01:36 AM #43

    calebcar - 07 September 2011 04:03 AM

    I have no idea how interest rates have stayed so low while they print so much money.

    Ha ha, that’s the first question someone asks when they start uncovering a Ponzi scheme, “how is this even possible?”. Today the yield of a 2-year US Treasury dropped to 1.90 at one point, the lowest ever. The only question is when interest rates go up, not if. Hence the 2014 LEAPS.

    The amazing thing is, all the fearful dummies who were worried about a US default ran to…US Treasuries…like lemmings jumping off a cliff. Fear doesn’t always lead to the best decisions.

    All I can say is, US Treasury buyers are going to shed some serious tears one of these days. And for what? These piddly yields?

    Signature

    We filed for over 200 patents for all the inventions in iPhone and we intend to protect them. — Steve Jobs, 2007

         
  • Avatar

    Posted: 07 September 2011 01:43 AM #44

    Apple II+ - 06 September 2011 03:52 PM

    But September monthly has one weird aspect to it—max pain is $390 which is below both the 80% and 95% ranges. Although Travis doesn’t post the actual max pain number, it’s usually within the range. FWIW.

    Is there any evidence a singular max pain number (vs range) has any veracity?

    Signature

    We filed for over 200 patents for all the inventions in iPhone and we intend to protect them. — Steve Jobs, 2007

         
  • Avatar

    Posted: 07 September 2011 01:53 AM #45

    lovemyipad - 06 September 2011 11:03 PM
    hfnaanouh - 06 September 2011 01:16 PM

    If I have the JAN2012 call unhedged when should I buy the short now expecting a dip or wait at high to collect money

    So sorry, but I can’t answer this for you.  Gets back to that whole “what do YOU expect the market to do next?”

    iPad, yes I have ordered the equivalent of the book Grays Sports Almanac from the movie Back To The Future for the stock market for the years 2012 through 2062, but they keep telling me they are out of stock.  Looks like Biff has that volume as well.  :(