AAPL Options Strategy

  • Avatar

    Posted: 28 March 2012 10:02 PM #91

    But iiiiiiiiiiPadddddd, it’s borrrrrrrrringggg. :innocent:  (/semi-troll) (oh crap have I finally done it this time?) LOL

    I hear you.  This is my one guaranteed winning trade for the year as long as it still has a shred of value at expiration.  BUT, why NOT try for something else?  It’s not that I don’t understand your thinking here, in a way you trade even more scared than I do.  I just don’t personally see a problem with taking my profit and throwing it into a potentially more productive risk bucket.  I’m actually pretty decent at keeping track of my reinvestments to benchmark my progress, in large part because I tend to swap the trades I sell in very short order.

    Signature

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

         
  • Avatar

    Posted: 28 March 2012 10:06 PM #92

    Mav - 29 March 2012 01:02 AM

    But iiiiiiiiiiPadddddd, it’s borrrrrrrrringggg. :innocent:  (/semi-troll) (oh crap have I finally done it this time?) LOL

    I hear you.  This is my one guaranteed winning trade for the year as long as it still has a shred of value at expiration.  BUT, why NOT try for something else?  It’s not that I don’t understand your thinking here, in a way you trade even more scared than I do.  I just don’t personally see a problem with taking my profit and throwing it into a potentially more productive risk bucket.  I’m actually pretty decent at keeping track of my reinvestments to benchmark my progress, in large part because I tend to swap the trades I sell in very short order.

    Dude, that’s a $2K spread you’re sitting on, with NOTHING invested in it!  Move along, move along!  Go mess up, er put on something ELSE! raspberry

         
  • Avatar

    Posted: 28 March 2012 10:06 PM #93

    iPad, wait! 

    I’m not sure if max was misleading me LOL or I was confused (more likely) or whatever.

    BUT, I have a Jan 13 credit BCS of 650/670.  Let’s just say (I can’t really remember right now) that from my 10k investment in Jan 13s (to make the numbers easy), I recovered 11.5k by shorting a higher-priced 670 call after AAPL went up some (shoulda waited longer, but oh well).  3k is “trapped” in the BCS as profit.  My max profit potential is 10k on the credit spread.  But isn’t there only 7k of profit ceiling left?  Or 5.5k?

    What am I missing here?  I clearly remember something about the profit I’ve “left behind” being counted in the max profit calculation.  Or was it all my profit?  I’m just confused.

    [ Edited: 28 March 2012 10:09 PM by Mav ]

    Signature

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

         
  • Avatar

    Posted: 28 March 2012 10:09 PM #94

    Mav, having dinner with hubby now…back later with reply…

         
  • Avatar

    Posted: 28 March 2012 10:12 PM #95

    Don’t you know that as an AFB mod, you should -

    enjoy your precious real-life time already being impinged upon by your thankless duties as volunteer mod? :D

    As presumptuous Mod Squad Reject? and AFB Semi-Lifer?, it’s my personal opinion that one shouldn’t even bother with the courtesy of “afk”, “bbl” and all the rest!  Life’s too short! mad 

    And I guess I’m just not all that polite!  Get offa my lawn! :eg:

    (I have yet to see Gran Torino.)

    [ Edited: 28 March 2012 10:15 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 11:12 PM #96

    dreamRaj - 28 March 2012 11:42 PM
    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 10 of the Apr 500s.

    With a bullish view that AAPL will go higher soon, I have a limit order set to sell 3 calls at $132 (when AAPL is around 632) to lock in profits.

    If earnings date happens to be before OE, then I’ll hold on to the remaining 7 with the hope of a next-day pop after earnings.

    If the earnings date is after OE (most likely), then I’ll sell all when AAPL is around 640.

    Nice position, Raj.
    I closed my 550s last week. Made a very nice profit, but you can be sure I wish I still had them now. I’m still holding 590s, and really having trouble seeing my exit with (what I consider) the craziness surrounding this weeks “window dressing” action, combined with the quickly approaching earnings report; all on top of an overall market that seems like it is running out of gas (this week).
    Keep my trigger finger at the ready.

         
  • Posted: 28 March 2012 11:26 PM #97

    lovemyipad - 28 March 2012 11:58 PM
    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

    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

    Thanks. Will digest this thoroughly.
    I definitely know about having my calls be in the money and yet still watching the IV turn against me.  Know it all   too   well.  :-(

         
  • Avatar

    Posted: 29 March 2012 01:06 AM #98

    Mav - 29 March 2012 01:06 AM

    iPad, wait! 

    I’m not sure if max was misleading me LOL or I was confused (more likely) or whatever.

    BUT, I have a Jan 13 credit BCS of 650/670.  Let’s just say (I can’t really remember right now) that from my 10k investment in Jan 13s (to make the numbers easy), I recovered 11.5k by shorting a higher-priced 670 call after AAPL went up some (shoulda waited longer, but oh well).  3k is “trapped” in the BCS as profit.  My max profit potential is 10k on the credit spread.  But isn’t there only 7k of profit ceiling left?  Or 5.5k?

    What am I missing here?  I clearly remember something about the profit I’ve “left behind” being counted in the max profit calculation.  Or was it all my profit?  I’m just confused.

    What, me mislead?  IIRC (and I am running low on ginkgo biloba), prior to legging into your spread, you had a $3,000 paper gain on an unhedged long call.  Bottom line, you could have closed it out to recognize the $3,000 gain, but you chose to sell the higher strike short leg for the opportunity to increase the $3,000 gain to a possible $10,000 gain plus your negative equity.  Bravo!!

         
  • Avatar

    Posted: 29 March 2012 01:13 AM #99

    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.

    TFSA are great. Mine has grown from 15k to six figures with aapl options. My strategy is has been to play the earnings by buying itm quarterly options.

         
  • Avatar

    Posted: 29 March 2012 01:18 AM #100

    iPad, in the intraday thread you were providing a roll-up ( is it breakfast already?) and roll-out suggestion for my July 450/460 BCS.  There is currently a $21,000 paper gain and a maximum gain of $30,000.  I would normally wait until 80% of the gain is realized before changing anything.  Do you agree or no?

    In any case, are you suggesting I enter another multiple-leg option order such as BTC July 460 and say STO July 550 or what?  If I were to do that, I would be closing the short leg at a loss and reselling a higher strike short leg for less premium, or a net debit.

    Would it make more sense just to close out the existing spread entirely and re-enter a brand new higher strike BCS?

         
  • Avatar

    Posted: 29 March 2012 01:22 AM #101

    mstefa - 29 March 2012 12:52 AM
    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.


    If you take money out, you can’t add it back until next year.

    Say, a TFSA has grown to $100 k. I take $50k out now. Next year I can add the 50k back + the 5k increase for that year.

    ( sorry for the off topic.  Although it is an options strategy for Canadians to make $$$ tax free)

         
  • Avatar

    Posted: 29 March 2012 01:28 AM #102

    madmaxroi - 29 March 2012 04:06 AM
    Mav - 29 March 2012 01:06 AM

    iPad, wait! 

    I’m not sure if max was misleading me LOL or I was confused (more likely) or whatever.

    BUT, I have a Jan 13 credit BCS of 650/670.  Let’s just say (I can’t really remember right now) that from my 10k investment in Jan 13s (to make the numbers easy), I recovered 11.5k by shorting a higher-priced 670 call after AAPL went up some (shoulda waited longer, but oh well).  3k is “trapped” in the BCS as profit.  My max profit potential is 10k on the credit spread.  But isn’t there only 7k of profit ceiling left?  Or 5.5k?

    What am I missing here?  I clearly remember something about the profit I’ve “left behind” being counted in the max profit calculation.  Or was it all my profit?  I’m just confused.

    What, me mislead?  IIRC (and I am running low on ginkgo biloba), prior to legging into your spread, you had a $3,000 paper gain on an unhedged long call.  Bottom line, you could have closed it out to recognize the $3,000 gain, but you chose to sell the higher strike short leg for the opportunity to increase the $3,000 gain to a possible $10,000 gain plus your negative equity.  Bravo!!

    Max has it exactly right. Here is another way to look at it.

    When you buy long unhedged calls and they go up, you have 2 choices;

    a)Sell the calls for a profit and move on to another trade or,

    b)Sell a higher call against them, thus creating a “free” BCS. It really isn’t free, you have just recommitted your unbooked gains from the long call.

    Personally I don’t like the credit spread strategy. Most platforms don’t correctly recognize the basis.  I would prefer to close out the profit on the long calls and then independently decide if I still want to buy the BCS.  The end result is exactly the same, albeit less commissions.

    I agree that it is MUCH cooler to say “I just got a “free” credit spread” vs “I just made some money on long calls, and used it to buy myself a BCS” 


    This was discussed in detail several weeks ago.  Where are our post stickies? grin

    [ Edited: 29 March 2012 01:34 AM by Rudyo ]

    Signature

    Jan13 $600 or BUST! LEAP Spread Trial: Bought Jan13 590/600 BCS @1.45 on 9-21-2011
    Max Profit: 689%  Current Price:
    4.50 +210% as of 5-2-2012 - Woohoo! Finally Green!

         
  • Avatar

    Posted: 29 March 2012 01:42 AM #103

    Negative equity vertical spreads are kind of hard to completely understand the first go-round.  Go easy on the newbie! LOL

    [ Edited: 29 March 2012 01:44 AM by Mav ]

    Signature

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

         
  • Avatar

    Posted: 29 March 2012 01:48 AM #104

    But now that you have it, I totally agree with ipad, DO NOT TOUCH IT!

    Ignore it, leave it alone, let it be, dont even think about it. 

    You will thank us, I promise.

    Signature

    Jan13 $600 or BUST! LEAP Spread Trial: Bought Jan13 590/600 BCS @1.45 on 9-21-2011
    Max Profit: 689%  Current Price:
    4.50 +210% as of 5-2-2012 - Woohoo! Finally Green!

         
  • Avatar

    Posted: 29 March 2012 01:49 AM #105

    Mav - 29 March 2012 04:42 AM

    Negative equity vertical spreads are kind of hard to completely understand the first go-round.  Go easy on the newbie! LOL

    If it makes you feel better, send me a check for double the amount of your negative equity so then you have equity! :-D