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Mature companies don't do what Apple (AAPL) did in the first half of 2012. Once upon a time, in the days before Facebook (FB), hot IPOs did such things, but not companies getting ready to approach middle age.

From the moment Apple started trading on January 3, 2012 to the very last trade ending the first half of the year in June 29, 2012, Apple's shares appreciated 42.6%

Regardless of how you slice and dice that statistic, it's pretty spectacular, but now it's time to slice and dice. Living in the past is a worthless pursuit unless it provides glimpses into what actions may be appropriate in the future if history does appear to be repeating itself.

Writing about Apple stirs emotions. Suggesting that Apple's share price may not continue its recent upward trajectory is considered as sacrilege by the faithful, who do have the past on their side in support of their contentions. Let's call that group "Stock Believers." I certainly won't refer to them as belonging to a "cult."

I am an inveterate covered option writer and have in the past done so, quite profitably with Apple. However, I have entirely missed its rapid and steeply inclined price rise above $450. Since 2006 I've been in and out of positions with an initial entry price of less than $56.

Stock Believers feel that there is little to no role for an option writing strategy. Apple is a perfect example of the lost opportunities that the covered option writer may experience when doing so on the "wrong stock." In this case, Apple has been the wrong stock for quite a while, at least as far as "Cynics" are concerned.

In so many areas, believers and cynics really can't co-exist very well, but they can do so in the case of Apple, at least as long as its share price obeys the law of gravity.

With almost neat precision, 2012 has been a tale of two halves, as it regards Apple's share price. From the close of trading on December 30, 2011 to March 30, 2012, Apple's shares spiked an astonishing 48%

However, from March 2 to June 29, 2012, its shares didn't fare as well, having fallen 3.2%. Not that anyone can select the high point, but since reaching its high point on April 9, 2012, Apple had fallen 8.4%, making it even trail the S&P 500.

From the covered call writer's perspective, once the unimpeded and unidirectional price movement has ended, Apple no longer represents the "wrong stock." The alternating positive and negative slopes are just the sort of image that an option seller believes reflects the kind of right stuff that a "right stock" needs.

First, let's look at the tale of the tape. (See Details)

The Stock Believer would have had his faith confirmed by opening a position in Apple on January 3, 2012 and maintaining it all through the first half of the year. In return for his faith, the ROI was 42.6%. That certainly would make a believer out of me.

Option writers are a complicated bunch. They can concurrently be both cynics and believers in their attempt to game the system, play the probabilities and literally keep their options open if the tide turns.

It is the cynic, who purchased those same shares on January 3, but instead wrote a call option at the nearest strike price. The cynic believes that the reward of the option premium outweighs the reward of stock ownership, at least as determined by the chosen strike price and contract term. But when shares are assigned, the Believer within the Cynic may come out as an expression of "FOMO," or the "fear of missing out" of further price appreciation. It was the believer who then blindly chased shares by repurchasing assigned shares the first thing on Monday mornings and then reverted to cynicism and sold the nearest strike priced option again. Doing so achieved a return of only 1.4%, as they were consistently repurchasing shares in the first three months and then watching those higher priced shares decline in price during the latter three month period. Option premiums just can't be a match for a combination of buying higher and higher and then selling low and lower.

Before I make it sound as if personality types are so simple, not every option seller is a cynic at heart. Some are believers. The believers are those that start out as cynics with regard to the future price movement of shares on which they sell calls, until their shares lose value. At that point, they cling to the belief that share price will rebound. Therefore, instead of selling calls at the prevailing near the money strike price, they cling to the strike price at which their shares were purchased. They are willing to trade off option premium income for a restoration of share value. Either that or they're unwilling to lose their self-respect by taking the risk of losing their shares at a strike price well below their cost basis.

Of course, self-respect didn't enter into their equation when they chased shares at much higher prices after assignment.

Still having done so, those pseudo-believers achieved a 14.3% return, but still a far cry from the true Stock Believer's results.

Whether anyone like s admitting it or not, many investors entered into their positions at and near the highs in April 2012. Even Stock Believers can lose faith when faced with losses that in the case of Apple exceeded 15% following the April high.

However, for the cynic, the second three months was horrible if that was their entry point. Whereas Apple Stock Believers lost less than 3% during that period, the covered call writers lost 10.5% by allowing their strike price selections to fall along with share price, in an effort to maximize option income.

By contrast, the option selling pseudo-believers realized a 1.5% gain, beating even the stock believers.

Personally, I like my faith to be exercised in a selective fashion. There are certain parts of personal faith that appeal to me while others less so. While I fully accept the tenet against murder, I'm not as willing to buy into the adultery prohibition. That seems to work well for me.

So too, can selectivity pay some dividends.

In this case, selectivity means that if your shares of Apple were assigned, instead if reflexively repurchasing them and writing calls at the nearest in the money strike, you would wait for the share price to retreat to a point that was below your originally assigned share's strike price.

In the case of the first three months of 2012, that didn't happen very often with Apple shares. Perhaps tellingly, it did happen during the final two weekly option cycles, following a string of eight consecutive weeks when shares would have been assigned and repurchased at higher prices.

However, in the second three months of 2012 the opportunity to re-purchase shares at a price below the previously assigned price was quite frequent. Having done so, the selective cynic realized a 7.6% return, where as the Stock Believer lost 2.8%.

Meanwhile, the selective believer and the selective cynic became one and the same. Not chasing a stock on an ascendant path means not having to settle for miniscule premiums while sitting and hoping that shares rebound.

That kind of faith, that price will bounce back is a characteristic of those investing in what others see to be as "value traps." Ditch that blind faith and instead exercise selectively in re-purchasing and then you can exercise cynicism in selecting a strike price.

The best of all worlds where believers and cynics can pick and choose as they enter the Heavenly Kingdom of profits side by side.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Apple: A Tale Of 2 Halves And 2 Investors