AAPL Options Strategy

  • Avatar

    Posted: 28 March 2012 09:23 PM #76

    Mav - 29 March 2012 12:17 AM

    IV is one hell of a double-edged sword.  You can never be entirely sure of its effects either to the upside or the downside.  Even with a BCS things can still get weird for days at a time.

    Theta is a pretty much known quantity that you can track day by day.  Vega (IV) is quite another matter.  Typically not that big a deal between earnings, but it has been lately and I’m confident it will continue to be starting sometime around now straight through earnings.

    +1

    That Vega is a sneaky little bugger, and when he teams up with Theta for the one-two knock out punch…I don’t want to be there! :D


    EDIT: Unless I’ve sold (paper) iron butterflies, that is! raspberry

    [ Edited: 28 March 2012 09:27 PM by lovemyipad ]      
  • Posted: 28 March 2012 09:24 PM #77

    lovemyipad - 29 March 2012 12:18 AM
    mstefa - 29 March 2012 12:04 AM

    Question for you all options wizzards:

    Got one of these handicapped accounts TFSA RRSP etc where short leggs are not allowed.
    I now what i did , but if you would to pick naked calls for 2014 where would you strike?
    Of course these days we all do well, but i wonder whats the best bang for the buck assuming AAPL at a cool 1k jan 2014?

    Not sure about the best bang for the buck—lots of factors go into that equation—but I’m holding JAN’14 750s. smile

    When you think about it thats around 20% from here . I am of the opinion that call writters missed this one by a mile, its hard to see AAPL go up less then 30% a year next 3 or 4 barring another 2008 which itself was once in generation . My strikes are bit lower but start at 700..

         
  • Avatar

    Posted: 28 March 2012 09:27 PM #78

    Wait wha, iPad?  Jan 14 750s is one thing - no hedging?!

    Yes, I know it’s a long ways off, and that a BCS is pretty damn impractical with Jan 14s (what with time premium and sellers’ pricing and all), but still! LOL

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Avatar

    Posted: 28 March 2012 09:32 PM #79

    redge - 29 March 2012 12:24 AM
    mstefa - 29 March 2012 12:04 AM

    Question for you all options wizzards:

    Got one of these handicapped accounts TFSA RRSP etc where short leggs are not allowed.
    I now what i did , but if you would to pick naked calls for 2014 where would you strike?
    Of course these days we all do well, but i wonder whats the best bang for the buck assuming AAPL at a cool 1k jan 2014?

    In case it isn’t clear, a TFSA is a relatively new Canadian tax free account where the maximum current investment is Cdn$20,000, with an annual allowed additional investment of $5,000, and an RRSP is very similar to a US retirement account. In these accounts, one can buy calls or puts, but it is not possible to do something like a bull call spread.

    And to piggyback on redge’s post:

    Their TFSA is a non-retirement account!  After-tax contributions, tax-free growth, and tax-free withdrawals.  It’s kinda sorta like a non-retirement version of a Roth-IRA.  NICE!!! smile

    [ Edited: 28 March 2012 09:36 PM by lovemyipad ]      
  • Avatar

    Posted: 28 March 2012 09:33 PM #80

    Mav - 29 March 2012 12:27 AM

    Wait wha, iPad?  Jan 14 750s is one thing - no hedging?!

    Yes, I know it’s a long ways off, and that a BCS is pretty damn impractical with Jan 14s (what with time premium and sellers’ pricing and all), but still! LOL

    They’ll be hedged pretty soon… wink  I’m legging JAN’14 750/800 bull call spreads. smile

         
  • Avatar

    Posted: 28 March 2012 09:39 PM #81

    lovemyipad - 29 March 2012 12:21 AM

    You are paper LOADED!!!!! smile

    I’m holding out for the $1 million mark before I paper sell!!!  HaHa

    [ Edited: 28 March 2012 10:03 PM by lovemyipad ]      
  • Avatar

    Posted: 28 March 2012 09:39 PM #82

    You Options 403 people think in very interesting ways.

    I guess current pricing has the Jan 14 750/800s set up for a max theoretical return a little over 3.5x.  I gotta say, that isn’t _too_ shabby for a Jan 14 BCS, assuming the trend you anticipate starts manifesting itself within about 3-6 months.

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Avatar

    Posted: 28 March 2012 09:40 PM #83

    macZiggy - 29 March 2012 12:13 AM
    lovemyipad - 28 March 2012 11:58 PM

    bbbo, careful please!!  JD and I were talking about IV today, and he kindly reminded me of this excellent post from AAPLTrader99:

    Earnings and IV

    Wow, iPad, thanks for posting this.  So, it seems to be a good Calendar play with the big drop in IV.  Will consider one.  Seems it would be a good play if AAPL also rises the first week of April.

    macZiggy, I was *just* contemplating paper trading a calendar spread! smile

         
  • Avatar

    Posted: 28 March 2012 09:40 PM #84

    Mace is a big fan of those.  Where are ya, Mace?

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Avatar

    Posted: 28 March 2012 09:41 PM #85

    macZiggy - 29 March 2012 12:39 AM

    I’m holding out for the $1 million mark before I paper sell!!!  HaHa

    Virtual party at macZiggy’s house!! :D

         
  • Avatar

    Posted: 28 March 2012 09:43 PM #86

    Mav - 29 March 2012 12:39 AM

    You Options 403 people think in very interesting ways.

    I guess current pricing has the Jan 14 750/800s set up for a max theoretical return a little over 3.5x.  I gotta say, that isn’t _too_ shabby for a Jan 14 BCS, assuming the trend you anticipate starts manifesting itself within about 3-6 months.

    LOL, Mav!  And if there’s no equity in the spread, what’s the theoretical return?  That’s the part I like! smile

         
  • Avatar

    Posted: 28 March 2012 09:47 PM #87

    I am still SO confused with the Jan 13 650/670 credit BCS I have.  I mean, I _kinda_ get it, and I kinda don’t.  :D

    Obviously I know how much capital I got back.  And I know how much gain the BCS can achieve theoretically.  Either myself, my brokerage, or both don’t know how much of that gain already exists in the form of “locked-up” leg-in profit.

    Partly due to my confusion and partly due to what I suspect is happening with this particular BCS (read: not appreciating as fast as I’d like it to), I intend to change it out for something with a higher risk profile once April rolls around.

    [ Edited: 28 March 2012 09:49 PM by Mav ]

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 28 March 2012 09:52 PM #88

    redge - 29 March 2012 12:42 AM

    Yes, one contributes after tax dollars to the account, at any age or time, and anything that one makes in the account is tax free. One can also take money out of the account, and put money back in, whenever one wants, as long as the balance is true to the allowed investment to the account (currently $20,000 with an additional contribution next Jan 1 of $5,000) less whatever one has lost or plus whatever one has gained.

    The UK has the same thing, but their ISA has been in place longer and allows larger annual contributions.

    Um.. My understanding is that you cant re-add after you took out.
    Contribution is 5000 , once a year only regardless if you were taking out.
    Fairly sure of that as there was talk of forgiving ppl for doing it before gov. came out with clear instructions.

    [ Edited: 28 March 2012 10:00 PM by lovemyipad ]      
  • Avatar

    Posted: 28 March 2012 09:57 PM #89

    Mav - 29 March 2012 12:47 AM

    I am still SO confused with the Jan 13 650/670 credit BCS I have.  I mean, I _kinda_ get it, and I kinda don’t.  :D

    Obviously I know how much capital I got back.  And I know how much gain the BCS can achieve theoretically.  Either myself, my brokerage, or both don’t know how much of that gain already exists in the form of “locked-up” leg-in profit.

    Partly due to my confusion and partly due to what I suspect is happening with this particular BCS (read: not appreciating as fast as I’d like it to), I intend to change it out for something with a higher risk profile once April rolls around.

    Hmmm…I need numbers to get what you’re saying.  Here, use my JAN’14 for illustrative purposes.

    BTO JAN’14 750 @ 50.00
    STO JAN’14 800 @ 50.00
    Net cost: 0.00
    Max profit: $5,000

    IMHO, don’t touch your JAN’13 650/670 bull call spread if it’s a credit.  Move along to something else.  Open something else, intact or legged…


    EDIT: Oh, hey!  I have legged JAN’13 650/670s too!!  And I’m NOT touching them!! smile

         
  • Avatar

    Posted: 28 March 2012 10:00 PM #90

    Some of these quote-history thingies are getting long…I’m going to go in and edit.  So no one freak out if it says I edited your post! raspberry