AAPL Options Strategy

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    Posted: 04 August 2012 06:24 PM #706

    LEAPfrog - 04 August 2012 05:45 AM
    lovemyipad - 04 August 2012 04:46 AM

    .....
    BTW, I too moved everything to APR’13 today.  With all these whipsaws, even JAN’13 seemed too close for my comfort.  I wanted to take profits and raise cash.

    I’m looking to exit some very profitable JAN’13’s and move into APR’s.  With all due respect, what strikes blew your skirt up?

    Different widths for different accounts…smaller widths require less capital to scale in and out.

    10-width:
    APR’13 690/700

    20-width:
    APR’13 680/700
    APR’13 730/750

    50-width:
    APR’13 650/700

         
  • Posted: 09 August 2012 12:48 PM #707

    JDSoCal - 08 August 2012 08:06 PM

    Not a surprise that we dropped below 620 late on a Wednesday. Pain range remains 615-619.99.

    JD, you keep talking about walls of options and pain ranges and it finally sank in with me. Setting aside the possible moral issue of trading weeklies, we are all looking for patterns to take advantage of and make some money. I mean, hopefully no one picks options or stock at random. We are looking for patterns. And here is one we see over and over. Even people who hate the idea of weeklies see the pattern, even though it makes them outraged. Well, I’ve decided to set aside my outrage and try to make some flibbin money.

    I think the way to do it with this pattern is to find a good set of walls to hide behind, so either below 615 or above 620. It’s interesting to price out the various ways this could be played:

    buy CS 610/615 $4.40 for a profit of .60
    sell PS 610/615 .68 for a profit of .68
    sell CS 620/625 $1.95 for a profit of $1.85
    buy PS 620/625 $3.20 for a profit of $1.80

    Of course, by profit I mean max profit, options are risky, caveat caveat, disclaimer.

    Why would the spreads at the same price levels have such different max profits? I mean, why sell a 620/625 call spread when buying the put spread at the same level could make you much more money? (corrected, thank you)

    [ Edited: 09 August 2012 01:08 PM by Xphilos ]      
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    Posted: 09 August 2012 01:00 PM #708

    Xphilos - 09 August 2012 03:48 PM
    JDSoCal - 08 August 2012 08:06 PM

    Not a surprise that we dropped below 620 late on a Wednesday. Pain range remains 615-619.99.

    JD, you keep talking about walls of options and pain ranges and it finally sank in with me. Setting aside the possible moral issue of trading weeklies, we are all looking for patterns to take advantage of and make some money. I mean, hopefully no one picks options or stock at random. We are looking for patterns. And here is one we see over and over. Even people who hate the idea of weeklies see the pattern, even though it makes them outraged. Well, I’ve decided to set aside my outrage and try to make some flibbin money.

    I think the way to do it with this pattern is to find a good set of walls to hide behind, so either below 615 or above 620. It’s interesting to price out the various ways this could be played:

    buy CS 610/615 $4.50 for a profit of .50
    sell PS 610/615 .20 for a profit of .20
    sell CS 620/625 $1.95 for a profit of $1.98
    buy PS 620/625 $1.65 for a profit of $3.35

    Of course, by profit I mean max profit, options are risky, caveat caveat, disclaimer.

    Why would the spreads at the same price levels have such different max profits? I mean, why sell a 620/625 call spread when buying the put spread at the same level could make you much more money?

    For those prices, are you looking at the bid/ask, or are you looking at the mark between the two? Because if you look at the mark, then max profit should be nearly equivalent. The price you quoted for the 620/625 PS definitely looks wrong.

         
  • Posted: 09 August 2012 01:09 PM #709

    It definitely was wrong, thank you for pointing that out. And you’re right, profits are about the same at the same strike levels.

    buy CS 610/615 $4.40 for a profit of .60
    sell PS 610/615 .68 for a profit of .68
    sell CS 620/625 $1.95 for a profit of $1.85
    buy PS 620/625 $3.20 for a profit of $1.80

         
  • Posted: 09 August 2012 03:50 PM #710

    Anyone using the low volatility (VXAPL currently at 23.2) to buy naked calls (or puts)?

         
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    Posted: 09 August 2012 04:06 PM #711

    calvinav - 09 August 2012 06:50 PM

    Anyone using the low volatility (VXAPL currently at 23.2) to buy naked calls (or puts)?

    Yep. Nov $650 calls.

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    Posted: 09 August 2012 05:22 PM #712

    The longer AAPL doesn’t do much, the lower VXAPL is likely to go.

    I’m thinking IV will hover-to-decline for up to 3-4 weeks.  Depends on AAPL, the markets, or new iPhone anticipation/rumors.

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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: 10 August 2012 01:42 PM #713

    I think we’re safe to expect the annual iPhone release schedule to remain a late summer/early fall event. If so, 2014 LEAPS bought now would be long term gains next year when the 7th generation iPhone comes out. It also doesn’t hurt that AAPL IV is so low at the moment.

    Anybody else considering this strategy? I’m looking at the 700 calls.

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  • Posted: 10 August 2012 02:21 PM #714

    I bought some this morning. I sold September 700 calls against it bring down the cost about a dollar.  IV could go down further and price could also but I felt the risk of more upside was greater than losing a little unrealized loss on the downside.

         
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    Posted: 10 August 2012 05:29 PM #715

    calvinav - 09 August 2012 06:50 PM

    Anyone using the low volatility (VXAPL currently at 23.2) to buy naked calls (or puts)?

    No, no.  Never again.  Again. wink

         
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    Posted: 10 August 2012 05:54 PM #716

    calvinav - 09 August 2012 06:50 PM

    Anyone using the low volatility (VXAPL currently at 23.2) to buy naked calls (or puts)?

    Bought some April 2013 670’s with proceeds from my earlier than anticipated close out of August 18 spreads…

    Waiting now for some Jan/15 Leaps….

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    Posted: 10 August 2012 11:56 PM #717

    Unhedged!  UNHINGED! LOL

    I went with an Oct 12 BCS myself today.  Which is pretty much riskier than Apr 13s at any rate. wink 

    VXAPL is getting pretty ridiculously low.  Assuming its relative reliability as an AAPL options IV proxy, I may start buying some calls soon in case of IV upswing during new iPhone anticipation.  I mean hey, that media invite is probably less than a month away…

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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: 16 August 2012 11:56 PM #718

    Doing some tax planning looking forward to year end.

    AAPL been very, very good to me…in 2012.

    Question:  assume I have a BCS expiring January 2013.  Can I buy back the short leg on December 29 and take the loss in 2012 then sell the long leg on Januay 2 and defer that gain until 2013? 

    If I could do this, assuming I have enough margin buying power to carry me over a few days, it could help offset some earlier realized gains….

    Maybe this belongs in Death and Taxes…... :-?

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    AAPL: to boldly go where no stock has gone before

         
  • Posted: 17 August 2012 12:40 PM #719

    Red Shirted Ensign - 17 August 2012 02:56 AM

    Doing some tax planning looking forward to year end.

    AAPL been very, very good to me…in 2012.

    Question:  assume I have a BCS expiring January 2013.  Can I buy back the short leg on December 29 and take the loss in 2012 then sell the long leg on Januay 2 and defer that gain until 2013? 

    If I could do this, assuming I have enough margin buying power to carry me over a few days, it could help offset some earlier realized gains….

    Maybe this belongs in Death and Taxes…... :-?

    I haven’t done it before, but that’s my plan also. I don’t see why not. Indeed, if you hold it long enough, the long leg could be long term gains, while the short leg is always short term losses.

    Unfortunately I didn’t plan ahead and had to shuffle things around to open some new call spreads. This is one thing you can’t do with put spreads, at least without the ability to sell naked puts unbacked by cash. : (

         
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    Posted: 18 August 2012 09:58 PM #720

    jkao - 17 August 2012 03:40 PM
    Red Shirted Ensign - 17 August 2012 02:56 AM

    Doing some tax planning looking forward to year end.

    AAPL been very, very good to me…in 2012.

    Question:  assume I have a BCS expiring January 2013.  Can I buy back the short leg on December 29 and take the loss in 2012 then sell the long leg on Januay 2 and defer that gain until 2013? 

    If I could do this, assuming I have enough margin buying power to carry me over a few days, it could help offset some earlier realized gains….

    Maybe this belongs in Death and Taxes…... :-?

    I haven’t done it before, but that’s my plan also. I don’t see why not. Indeed, if you hold it long enough, the long leg could be long term gains, while the short leg is always short term losses.

    I’d strongly recommend contacting a tax pro before trying any of this.

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