Options Strategy (Archive)

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    Posted: 22 October 2011 12:25 AM #526

    lovemyipad - 22 October 2011 02:48 AM
    madmaxroi - 22 October 2011 02:39 AM
    lovemyipad - 22 October 2011 02:34 AM

    I’ve been legging AAPL 350/370 bull put spreads for JAN’12 this week.  Cost basis (so far): 10 credit.  Beats wringing my hands and takes the edge off downwaves.

    That’s fabulous.  So, did you purchase the 350 long put first (how long have you had), then leg in with the short 370 put leg as AAPL’s price dropped and the 370’s value grew?

    Precisely! smile  I bought the 350s on Tuesday around 7.50 - 8.50 (laptop is downstairs…I’m on iPad now).  I first legged in with with the 370s at 17 yesterday, then out today at 14-something, then in again at 17.25.  The lower we drop, the lower I will make the cost basis.

    Yeah, really takes some equity to open the short puts first.

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    Posted: 22 October 2011 12:41 AM #527

    lovemyipad - 22 October 2011 03:20 AM
    madmaxroi - 22 October 2011 03:12 AM
    lovemyipad - 22 October 2011 02:57 AM

    I won’t exit the 350 puts at all. I’ll keep the spreads intact at the lowest possible cost basis (highest possible credit).  If AAPL is over 370 at OE, the full credit is mine to keep.

    But it sounds like you have already exited the 370’s once.  If the market moved north fast while you were just long the 350 leg, what would you do?  Sell a short leg with a higher strike?

    Hmmmm…I would likely sell the 370s again and eat the loss, knowing I have until January to improve cost basis.  I would only unhedge for a day trade, and I do this slowly, not all contracts.  At this point, the credit is perfectly acceptable as is.

    Ok, so if you hedge all non-day trades, how do you know if you will be able to leg in at some point during the day?  Under what circumstances do you just enter the spread all at once?  My apologies in advance if I am beating a dead horse (no, I am not calling you a horse).  smile

    As for your last response, you would not be eating a loss, but rather accepting a smaller credit.

         
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    Posted: 22 October 2011 12:42 AM #528

    JDSoCal - 22 October 2011 03:25 AM

    Yeah, really takes some equity to open the short puts first.

    And brass ones! :D

    I don’t sell uncovered options ever, under any circumstances.

    If price is low enough that you’re shorting puts first, I’d be buying calls.

         
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    Posted: 22 October 2011 12:52 AM #529

    madmaxroi - 22 October 2011 03:41 AM

    Ok, so if you hedge all non-day trades, how do you know if you will be able to leg in at some point during the day?  Under what circumstances do you just enter the spread all at once?  My apologies in advance if I am beating a dead horse (no, I am not calling you a horse).  smile

    As for your last response, you would not be eating a loss, but rather accepting a smaller credit.

    Entry/exit, dahling, is the realm of technical analysis. wink 

    I open intact spreads when the price is stupidly cheap.  Like the JAN’13 350/360 bull call spread at 4.75 - 5.00 the other month.  Or JAN’13 410/430 bull put spread at 13.30 credit.  JAN’13 is entering stupidly cheap territory again, so I’ll be watching.

    RE: smaller credit…exactly!

         
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    Posted: 22 October 2011 01:15 AM #530

    lovemyipad - 22 October 2011 03:52 AM
    madmaxroi - 22 October 2011 03:41 AM

    Ok, so if you hedge all non-day trades, how do you know if you will be able to leg in at some point during the day?  Under what circumstances do you just enter the spread all at once?  My apologies in advance if I am beating a dead horse (no, I am not calling you a horse).  smile

    As for your last response, you would not be eating a loss, but rather accepting a smaller credit.

    Entry/exit, dahling, is the realm of technical analysis. wink 

    I open intact spreads when the price is stupidly cheap.  Like the JAN’13 350/360 bull call spread at 4.75 - 5.00 the other month.  Or JAN’13 410/430 bull put spread at 13.30 credit.  JAN’13 is entering stupidly cheap territory again, so I’ll be watching.

    RE: smaller credit…exactly!

    What do you think about Jan 12 340/360 bull put spreads for approx $5?