Rolling Apple Protected Covered Calls [View article]
Well, actually more like am neutral-to-bullish, because the protected covered call works for a stagnant stock, as is the case with Apple over the last month or so. Yet, not neutral-to-bullish enough to not want to protect the downside.
Rolling Apple Protected Covered Calls [View article]
Selling deep OTM puts can be a lucrative means of income as long as you are consistent at picking good stocks, receiving a reasonable premium and there are no Black-Swan events. One thing that struck me about remurraymd's first comment is that he claimed that we were giving up the upside with the protected covered call position as the CNBC analyst said the stock may hit $650. The same is true with the naked put. If one strongly feels the stock may hit $650 in 20 days one would consider a play that has an open upside profit potential as opposed to a capped gain with a covered call, collar or naked put position.
This is the great thing about options...they give us options! If you are more speculative bullish on AAPL, or if you are planning on holding the position long term and continually earn a 'dividend like income' month by month, the deeper OTM call will satisfy your outlook.
The approach here is more conservative - meaning the gains are capped but the maximum risk is limited: The monthly goal is to generate about 3%+ per month if possible while not risking more than 6-7% if the stock goes in the opposite direction from our expectations, while keeping a reasonable expectancy of earning that monthly return goal.
Rolling Apple Protected Covered Calls [View article]
This type of position would have a much lower cost basis, but a very high risk to the downside. Yes, the short put is 50-55% OTM and AAPL would need to drop below $275 for the stock to be put to you, and decline further to realize further loss, but the risk is there. Although it is highly unlikely that APPL would decline that much we want to protect against Black Swan events with a locked in, limited risk position.
The benefit of the options trade you mention, aside from the lower cost involved, is that the upside profit is unlimited. If AAPL has a significant run up in price your position would realize larger gains than the collar position discussed in the post.
Remember, the long call does not cover the short put obligation. If you were trading cash secured positions you would need to have on hold the $275.00 per share ($27,500 per short put contract) until the short put expires or is closed. Of course, this monetary requirement would be lower than the cost of the collar discussed in the article. Make sure that if you choose to use leveraged positions that you exercise proper money management and do not have too much of your capital at risk in any one position.
Apple: Trading The Calendar For The Next Few Months [View article]
http://bit.ly/T6Fuct
Not too sure about that ROIC 40.7% listed in the table.
Apple: Cheap Option Volatility Plays [View article]
Apple: Cheap Option Volatility Plays [View article]
http://bit.ly/MwxYUF
Rolling Apple Protected Covered Calls [View article]
Rolling Apple Protected Covered Calls [View article]
This is the great thing about options...they give us options! If you are more speculative bullish on AAPL, or if you are planning on holding the position long term and continually earn a 'dividend like income' month by month, the deeper OTM call will satisfy your outlook.
The approach here is more conservative - meaning the gains are capped but the maximum risk is limited:
The monthly goal is to generate about 3%+ per month if possible while not risking more than 6-7% if the stock goes in the opposite direction from our expectations, while keeping a reasonable expectancy of earning that monthly return goal.
Rolling Apple Protected Covered Calls [View article]
The benefit of the options trade you mention, aside from the lower cost involved, is that the upside profit is unlimited. If AAPL has a
significant run up in price your position would realize larger gains
than the collar position discussed in the post.
Remember, the long call does not cover the short put obligation. If you were trading cash secured positions you would need to have on hold the $275.00 per share ($27,500 per short put contract) until the short put expires or is closed. Of course, this monetary requirement would be lower than the cost of the collar discussed in the article. Make sure that if you choose to use leveraged positions that you exercise proper money management and do not have too much of your capital at risk in any one position.
Rolling Apple Protected Covered Calls [View article]
Love it when someone forecasts the future, we shall see...