AAPL Options Strategy

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    Posted: 27 March 2012 11:26 AM #46

    terps530 - 27 March 2012 01:48 PM

    i have a bull put spread i got last week 525/535.  odd that the 525 put is actually going up slightly as the price is going up and setting new highs here after the past 15min.  guess the IV is going up?

    FYI, usually it helps us out if you tack on the expiration month/week on your position. Just for a brief instant, I initially thought you somehow picked up the weeklies, but then realized that you were probably talking about Aprils.

         
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    Posted: 27 March 2012 11:43 AM #47

    yea my bad forgot to mention for april.  anyway now they are going down as apple keeps flying woot woot

         
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    Posted: 27 March 2012 12:00 PM #48

    terps530 - 27 March 2012 02:43 PM

    yea my bad forgot to mention for april.  anyway now they are going down as apple keeps flying woot woot

    Have you thought about rolling them up to higher strikes? 525/535 seems pretty deep in there, but then again, that’s just my taste. I’m sitting on a stack of Apr 555/575 call spreads that I picked up when they were still decently OTM that I’ll ride for a little bit longer.

         
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    Posted: 27 March 2012 07:23 PM #49

    nkmho - 27 March 2012 03:00 PM
    terps530 - 27 March 2012 02:43 PM

    yea my bad forgot to mention for april.  anyway now they are going down as apple keeps flying woot woot

    Have you thought about rolling them up to higher strikes? 525/535 seems pretty deep in there, but then again, that’s just my taste. I’m sitting on a stack of Apr 555/575 call spreads that I picked up when they were still decently OTM that I’ll ride for a little bit longer.

    See now, I would be way too chicken to roll up those APR’12 525/535s unless I was rolling OUT as well.  I would have already closed APR’12 555/575s and reallocated that $$ further out.

    It’s way too stressful for me to “hold” front month options because they’ve blown up on me too many times.  Day trading, yes.  Holding, no.  I like the extra breathing room. smile

         
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    Posted: 27 March 2012 07:32 PM #50

    lovemyipad - 27 March 2012 10:23 PM
    nkmho - 27 March 2012 03:00 PM
    terps530 - 27 March 2012 02:43 PM

    yea my bad forgot to mention for april.  anyway now they are going down as apple keeps flying woot woot

    Have you thought about rolling them up to higher strikes? 525/535 seems pretty deep in there, but then again, that’s just my taste. I’m sitting on a stack of Apr 555/575 call spreads that I picked up when they were still decently OTM that I’ll ride for a little bit longer.

    See now, I would be way too chicken to roll up those APR’12 525/535s unless I was rolling OUT as well.  I would have already closed APR’12 555/575s and reallocated that $$ further out.

    It’s way too stressful for me to “hold” front month options because they’ve blown up on me too many times.  Day trading, yes.  Holding, no.  I like the extra breathing room. smile

    Yeah, I’m about to roll those 555/575s up and out within a week (I should probably do it this week now that you mention it). I already rolled up and out the Apr 550/560s I held to Jul spreads last week. Then I’ll start moving my May positions out at well.

    Edit: I can’t believe it’s almost April already. Here I was, thinking that March had just begun.

    [ Edited: 27 March 2012 10:07 PM by nkmho ]      
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    Posted: 28 March 2012 11:24 AM #51

    lovemyipad - 27 March 2012 10:23 PM
    nkmho - 27 March 2012 03:00 PM
    terps530 - 27 March 2012 02:43 PM

    yea my bad forgot to mention for april.  anyway now they are going down as apple keeps flying woot woot

    Have you thought about rolling them up to higher strikes? 525/535 seems pretty deep in there, but then again, that’s just my taste. I’m sitting on a stack of Apr 555/575 call spreads that I picked up when they were still decently OTM that I’ll ride for a little bit longer.

    See now, I would be way too chicken to roll up those APR’12 525/535s unless I was rolling OUT as well.  I would have already closed APR’12 555/575s and reallocated that $$ further out.

    It’s way too stressful for me to “hold” front month options because they’ve blown up on me too many times.  Day trading, yes.  Holding, no.  I like the extra breathing room. smile

    Yea I mean when I got them, it was just about 10% below.  I know it is more now, but I guess I am being a bit cautious.  The spread is just worth .25-.30 now so it’s probably a safe bet.  If I close, I may wait till next week to reopen a new one in case this week is inflated due to the end of the quarter.  By then I may roll out cause we’ll be in April.  I guess it depends how much IV are in the prices so that I could get a decent % return.  We’ll see, but it is worth looking at so thank you.

         
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    Posted: 28 March 2012 12:37 PM #52

    I ended up putting in some limit orders before the open to close out those Apr 555/575s, and I got them filled during that opening pop to 620-621 I was expecting. Then I took most of the proceeds to threw them into some May spreads, Jul spreads, and Jan 14 LEAPS.

    During all that however, I accidentally put in a sell order for one of my current LEAPS, instead of a buy order to add to the position. :-x

         
  • Posted: 28 March 2012 01:17 PM #53

    I was wondering if someone more experienced than me can provide some perspective on this: I’ve noticed that near the money BCS for several months out or longer seem to sell for around half of their fully-realized value. This would be equivalent to saying that AAPL has a 50% chance of going up vs going down in that time period, no? What am I missing here? I would’ve expected these to be significantly more expensive.

    Also, hi!

         
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    Posted: 28 March 2012 03:06 PM #54

    Sup.

    I don’t know or entirely care how a particular BCS is priced (since it’s just a function of how the two calls are priced).  I refer to the max gain potential and sometimes check volume and OI just in case (“around-the-money” BCSes for AAPL strikes a few months out tend not to be a problem), and off I trade.

    But yes, it is interesting to see that phenomenon in action.

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
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    Thanks, Steve.

         
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    Posted: 28 March 2012 03:18 PM #55

    Does/has anyone ever used a ratio spread?  For example a 1:2 ratio like buying 1 apr 600 call ($26), selling 2 apr 650 calls (2x$6).

    Net cost is $14 instead of $20 for a regular spread. 
    Risk increased because if Apple is greater than 650, you start to lose from your max profit.  Break even point would be if Apple got to 686, and then you would start losing money after 686.

    However, if you think 650 is a good cap, you can always buy one back near expiration to get back to a regular call spread etc.

    Anyway, I mention it because I was reading something last night about doing 1:2 or 1:3 ratio spreads.  I think it was geared more towards investors with a lot of $$ because technically you are selling a naked call right?  I’m not even sure if my broker would allow a ratio spread because of that.

    Thanks

         
  • Posted: 28 March 2012 04:45 PM #56

    Mav - 28 March 2012 06:06 PM

    Sup.

    I don’t know or entirely care how a particular BCS is priced (since it’s just a function of how the two calls are priced).  I refer to the max gain potential and sometimes check volume and OI just in case (“around-the-money” BCSes for AAPL strikes a few months out tend not to be a problem), and off I trade.

    But yes, it is interesting to see that phenomenon in action.

    Right, I mean that max gain is around 100% for BCSes near the current price.

         
  • Posted: 28 March 2012 07:15 PM #57

    Anybody (still) holding April ITM calls?  Care to share your plans for them?
    My feeling is that with earnings just around the corner, these could keep on moving up and up right very close to expiration. (closer than would normally be the case) and therefore, I’m feelin’ a little risky.  :eg:
    Also: I can’t believe the volume in these things. The 615s traded 12,096 today; the 620s traded 17,010

         
  • Posted: 28 March 2012 07:35 PM #58

    bbbo - 28 March 2012 10:15 PM

    Anybody (still) holding April ITM calls?  Care to share your plans for them?
    My feeling is that with earnings just around the corner, these could keep on moving up and up right very close to expiration. (closer than would normally be the case) and therefore, I’m feelin’ a little risky.  :eg:
    Also: I can’t believe the volume in these things. The 615s traded 12,096 today; the 620s traded 17,010

    phoebear611 - I don’t think they announce the earnings date until after the quarter has ended.

    bbbo -  I unloaded May calls today that were just plain struggling.  They couldn’t keep their heads up even with the gains the last few days.  A lesson for me on theta I suppose.  I sold them today and will redeploy the cash shortly as October or Jan 13 calls.

    My best performing naked calls have been ones I bought 20-30 points OTM with far off expiration to keep the decay at bay.

    I have a whole bunch of May spreads, and am starting to feel more inclined to hold many of them through earnings.

         
  • Posted: 28 March 2012 08:09 PM #59

    bbbo - 28 March 2012 10:15 PM

    Anybody (still) holding April ITM calls?  Care to share your plans for them?
    My feeling is that with earnings just around the corner, these could keep on moving up and up right very close to expiration. (closer than would normally be the case) and therefore, I’m feelin’ a little risky.  :eg:
    Also: I can’t believe the volume in these things. The 615s traded 12,096 today; the 620s traded 17,010

    I have about 8% in April ITM calls, and plan to do a full assessment about two weeks out.

         
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    Posted: 28 March 2012 08:21 PM #60

    nkmho - 28 March 2012 03:37 PM

    During all that however, I accidentally put in a sell order for one of my current LEAPS, instead of a buy order to add to the position. :-x

    Blah.  I made two clerical errors today myself.  Luckily I fixed them very quickly, but still blah.

    Here’s one of mine, and the fix:

    Started this morning long a bunch of JUL’12 650/700 bull spreads.  Around the AM high, STC those, purely a volatility play as I planned to repurchase when the IV dropped during the day.  I was doing this across many accounts (knocked 1.00 off the cost basis), and in the last one, I STO’ed instead of BTO’ing.  Ugh!  So I accidentally opened bear spreads: short 650 and long 700.  I didn’t want to BTC because even though this was TradeMonster, Fidelity has me trained not to STO and BTC on the same day.  Lickety split, I bought 630s.  Then waited for more up and sold 720s.  Now I have 630/650s and 700/720s.  I will fix them eventually.  Fix the fix, that is.

    (Yes, Mace!  I know!  I know!  More shoes! raspberry)

    [ Edited: 28 March 2012 08:27 PM by lovemyipad ]