Hello, I’m Dragonfly.

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    Posted: 04 December 2011 06:27 PM

    [This post was removed because the moderators arbitrarily censor.]

    [ Edited: 08 January 2012 04:10 AM by the_dragonfly ]

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    Posted: 04 December 2011 06:32 PM #1

    This post contained original research.


    [This post was removed because the moderators arbitrarily censor.]

    [ Edited: 08 January 2012 04:10 AM by the_dragonfly ]

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  • Posted: 04 December 2011 06:51 PM #2

    the_dragonfly - 04 December 2011 10:32 PM

    Here’s a little bit of research I did recently.  In the past I’ve always bought narrow spreads, but was wondering if wider spreads made more sense. Maybe this is obvious to others, but I had to crunch the numbers to see…. here’s a graph of the return from the named spreads.  Wider spreads are a bit cheaper (as a percentage of spread width), but narrower spreads pay off earlier, and the risk comes in the stock not being as high as you want by expiration….

    July 2012 Expiration, using prices from a few days ago:

    Thanks for the graph.  From the graph, I would prefer the narrow spreads.

         
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    Posted: 04 December 2011 06:52 PM #3

    [This post was removed because the moderators arbitrarily censor.]

    [ Edited: 08 January 2012 04:11 AM by the_dragonfly ]

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    Posted: 04 December 2011 08:34 PM #4

    the_dragonfly - 04 December 2011 10:27 PM

    So, any one interested in talking about bull call spreads?  The cycle from earnings to earnings where AAPL goes up before earnings and then declines after?

    Welcome!  Come play with us in the Options Strategy thread! smile

         
  • Posted: 04 December 2011 08:47 PM #5

    Welcome to AFB.

    I use charts from ThinkOrSwim, a broker specializing in options.  Also use StockCharts.com, a cloud based product.

    I also recommend the AFB options thread. You will even do well to use the search function to find older options threads.  There was a day when it was a sticky topic here on AFB and the quality of the posts was quite good.

    Opinion:  One should not trade options with real money until one has educated oneself and practiced with Monopoly money.

         
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    Posted: 04 December 2011 09:37 PM #6

    [This post was removed because the moderators arbitrarily censor.]

    [ Edited: 08 January 2012 04:11 AM by the_dragonfly ]

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    In any society, when the rules are not enforced on some segment of the population, that segment will become increasingly abusive to the innocent. Examples: Cops & Old Timers on this forum.

         
  • Posted: 05 December 2011 12:24 AM #7

    alice - 04 December 2011 10:51 PM

    Thanks for the graph.  From the graph, I would prefer the narrow spreads.

    It sounds very much like you are a buy and hold kinda investor, looking to change strategies a bit.  You might look at deep in the money quarterly Call Spreads, something that is going to yield in excess of 50%.

    Until the markets open you can’t rely on quotes showing correctly, but it appears that you can get APR $370/$375s for ~$2.80 (76% yield). Even with ISM compression that should be fairly safe.  I wouldn’t buy the APRs until mid to late February though. You might get a better yield at that time for the same Spread, at the very least you won’t have money at risk for as long.

    [ Edited: 05 December 2011 12:27 AM by Gregg Thurman ]

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  • Posted: 05 December 2011 12:31 AM #8

    Another thought would be to buy LEAPS using the same in-the-money strategy.  Then as AAPL moves up add to your position by purchasing higher Strike Spreads (same expiry) that yield the same amount as your first purchase.

    Along the way your original purchase may top out, even though we haven’t reached expiry.  You can close out and start over buying the following LEAP.

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  • Posted: 05 December 2011 12:40 AM #9

    Until I got addicted to Weekly options I liked to buy at-the-money Calls 6 to 9 months out.  With a 2% - 3% increase in AAPL I would then create a Spread by selling the Strike just above my original Call.  I end up with a Spread that didn’t cost me anything, and put my original funds into another position.

    Example:

    Buy the July $390 Call at $44.00.  Immediately after January earnings you should be able to sell the July $410s for $44.00.  You end up with a $40 Spread that didn’t cost you anything.

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    Posted: 05 December 2011 04:42 AM #10

    [This post was removed because the moderators arbitrarily censor.]

    [ Edited: 08 January 2012 04:11 AM by the_dragonfly ]

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    In any society, when the rules are not enforced on some segment of the population, that segment will become increasingly abusive to the innocent. Examples: Cops & Old Timers on this forum.

         
  • Posted: 05 December 2011 12:59 PM #11

    the_dragonfly - 05 December 2011 08:42 AM

    Very curious to hear what you’re doing with the weeklies. I’ve benn mulling them over and paper traded various things and researched a bunch of others, but none has looked good yet.

    Not well.  AAPL’s volatility has been hell on wheels.  I’ve lost over $1 million this year, but most of that was between March (Japanese earthquake) and August.  I started trading Weeklies seriously in July.

    That said, I think we have hit an inflection point that is going to reduce AAPL’s volatility for the next 12 months.

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    Posted: 05 December 2011 03:00 PM #12

    [This post was removed because the moderators arbitrarily censor.]

    [ Edited: 08 January 2012 04:12 AM by the_dragonfly ]

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    In any society, when the rules are not enforced on some segment of the population, that segment will become increasingly abusive to the innocent. Examples: Cops & Old Timers on this forum.

         
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    Posted: 05 December 2011 06:06 PM #13

    See me in the Options Strategy thread. wink  When AAPL’s in an uptrend, I leg bull call spreads.  When AAPL’s in a downtrend, I leg bull put spreads.

         
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    Posted: 05 December 2011 11:40 PM #14

    [This post was removed because the moderators arbitrarily censor.]

    [ Edited: 08 January 2012 04:12 AM by the_dragonfly ]

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    In any society, when the rules are not enforced on some segment of the population, that segment will become increasingly abusive to the innocent. Examples: Cops & Old Timers on this forum.

         
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    Posted: 06 December 2011 02:27 AM #15

    ipad loves animals. she already has a pet wolf, lion, & bumblebee.

    a dragonfly is going to fit right in.