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The Deliberate Trader

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  • Apple Is Worth $265 [View article]
    We can't comment on the fundamental analysis because thankfully, we don't do it.

    Within the context of the article, the chart simply reinforces the fact that fundamentals do not move markets; and those who do not understand the role of sentiment will be giving their apple to the teacher.
    Mar 7 05:28 AM | Likes Like |Link to Comment
  • Apple Is Now Cheaper Than Dell, Hewlett-Packard [View article]
    No, we really don't waste our time with it.......a loser is still a loser.

    Long NOK from 1.76 (and no, we don't own a Nokia phone....lol).
    Jan 27 08:05 AM | 2 Likes Like |Link to Comment
  • Apple Is Now Cheaper Than Dell, Hewlett-Packard [View article]
    APPL should be "cheaper" than DELL or HPQ. It just lost almost 40% of its market cap in less than 6 months!!!
    Jan 27 07:43 AM | 1 Like Like |Link to Comment
  • How to Protect Your Stock Position in Apple [View article]
    Hi dpk,

    I'm sorry, but I'm not sure I'm following what you are asking.

    You want me to assume that you are not holding the stock, but have a long position with 330 calls; and you want to know how to protect the position? Are you holding January 2014 call options? If so, the price of 330 calls will respond just like the stock since they are so deep in the money. You could purchase puts to protect the position, but that should probably have been done several months ago.

    If I'm not understanding you, let me know.
    Jan 26 11:23 PM | Likes Like |Link to Comment
  • Lessons Learned From An Apple Bull [View article]
    http://seekingalpha.co...
    Jan 26 01:35 PM | Likes Like |Link to Comment
  • Lessons Learned From An Apple Bull [View article]
    Learn how to protect positions with options and don't worry about it.

    http://seekingalpha.co...

    http://seekingalpha.co...

    This sick dog can get well even without having the stock price rise much.
    Jan 26 08:23 AM | 2 Likes Like |Link to Comment
  • Lessons Learned From An Apple Bull [View article]
    ".......an average entry price of 505 dollars. I need to decide whether to average down, or sit tight." Since you "definitely will not sell..........", here's a tip:

    AAPL is presently in no-man's land on the charts. Look for it to trade down into the 380.00 - 400.00 range. If it hits 400.00 soon (within 2 weeks) try selling April 390.00 puts to cover (potentially double) your shares for $15 - $20. This should lower your basis to 430.00 or so (if the shares are assigned to you). If the shares are not assigned, your basis is lowered to 485.00 or so.

    You can do even better than that if you sell 475.00 calls to cover on pops between 450.00 - 475.00. Be sure that the calls have only about 30-45 days to expire.

    Do you see why 475 calls and 390 puts are suggested?
    Jan 26 08:14 AM | 1 Like Like |Link to Comment
  • Lessons Learned From An Apple Bull [View article]
    Good comment.... "no Jobs = no innovation....[is] silly".

    However, the idea expressed a few comments above that to the effect that hedging is "part of the problem" is ignorant.

    If you don't know how to protect positions in your "darling" stocks, you should simply buy mutual funds and hope for the best.

    http://seekingalpha.co...

    http://seekingalpha.co...

    ........successful investing isn't easy, but the big bad Wall Street Boogeyman won't hurt you if you know what you are doing.
    Jan 26 07:47 AM | 2 Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    Said this on 12/13/12 under a different AAPL "cheerleader" article:

    "As much as it may pain some to hear it, AAPL has broken trend on a point and figure chart, which is the best indicator of a stock's supply/demand picture. Supply is in control right now; and it looks like AAPL may see 460.00 before it sees 600.00. We trade 'what is'."

    It's not about margins, guidance or analyst forecasts. If that's what you think, we're here to take the other side of your trade.
    Jan 24 08:48 PM | 3 Likes Like |Link to Comment
  • Apple, I Want My Money Back! [View article]
    Aw shucks..........guess nobody liked this comment.....
    Jan 24 08:39 PM | Likes Like |Link to Comment
  • How Apple's Current Price Is Justified [View article]
    Just like "deserve's got nothing to do with it", neither does "justified" have anything to do with it.

    The probability is that AAPL is headed to 460.00; and a little patience should deliver some nice bargains. For those who don't have any, (patience, that is).............sell the AAPL March 480 put for 28.00 or better.

    If AAPL continues to slide for another quarter, you may end up owning it below chart support at 452.00 (480.00 - 28.00).

    Otherwise, you'll pocket the 28.00 and earn a 23% annualized return on your invested capital.

    Tough choice, isn't it?
    Dec 16 10:32 AM | Likes Like |Link to Comment
  • Apple, I Want My Money Back! [View article]
    The potential problem that we see with your trade is the directional bias. What if AAPL stock continues to decline?

    As much as it may pain some to hear it, AAPL has broken trend on a point and figure chart, which is the best indicator of a stock's supply/demand picture. Supply is in control right now; and it looks like AAPL may see 460.00 before it sees 600.00. We trade “what is”.

    So we'd reverse your trade and buy 1 June 525 put for 53.00 and sell 2 June 500 puts for 41.00 each. The credit is about 29.00; and while there may be some margin or additional capital outlay if the puts are totally secured with cash, the probability of a more favorable outcome is greater (the trend is your friend). Plus, if you already own 100 shares of AAPL you're protecting your investment from additional price erosion (albeit limited to the spread).

    Possible outcomes of the trade:

    1) AAPL goes up, all options expire worthless and you pocket 29.00, a near 6% return on your additional invested capital (nearly 12% annualized);

    2) AAPL trades between 525 and 500 and you pocket between 1.00 and 25.00 on the long put, and keep 29.00 of net short put premium (the return on additional invested capital is between 12% and 21% annualized);

    3) AAPL trades below 500.00 and you pocket 25.00 in long put premium, the 29,00 credit and you effectively own 100 (more) shares of AAPL at 446.00.

    Of course, if you already own 100 shares of AAPL stock at 705.00, your average price per share is reduced to 575.50 if you get what's behind door #3.

    With your trade there is no protection if the stock declines further. Using a put ratio spread, if the stock rallies from here, you pocket the 29.00 credit......and the stock rallies. That's the worst case scenario.....unless you think AAPL is headed toward zero.

    There are all kinds of ways to use options as a tool to polish your AAPL.
    Dec 13 11:21 PM | Likes Like |Link to Comment
  • There Are No Strategies For Making Extraordinary Returns With Apple Options [View article]
    ".....the main source of edge is due to the mispricing of implied volatility (IV)."

    Absolutely. Point well made.

    The recent articles that tout routinely selling covered calls on higher yielding stocks to enhance income are subject to the exact same criticism if they promote that hypothesis with no discussion about option IV.

    Thanks for the article.
    Sep 4 07:22 PM | Likes Like |Link to Comment
  • How to Protect Your Stock Position in Apple [View article]
    It's surprising to us that you would suggest that you MUST pay for put protection on a stock position. It isn't true; and our suggested trade demonstrates that. Of course, the risks are different, but that is not what you are suggesting; and your comment doesn't address the different risk profiles, much less the different trade objectives.

    The “protection” you have suggested is “sell the stock” or put the shareholder at risk of having the stock called away at 360.00 by selling an August call when quarterly earnings will be released in July. What if there is a July earnings pop to 400.00? Nice move.......you sold your stock for 360.00 (minus 6.00).

    This completely disregards the primary premise of the article, which is that Apple shareholders want to keep their stock, protect it, and perhaps acquire more at lower prices. The differences in your suggestion and ours are structural and impact the objectives of the trade. If you don't mind the risk of giving your Apple to the teacher, your suggestion will work.

    It will be interesting to follow the course of these various alternatives to see how this plays out. Thanks for the comment.
    Jun 26 11:03 AM | 3 Likes Like |Link to Comment
  • How to Protect Your Stock Position in Apple [View article]
    Labeling this trading technique “option ignorance” coupled with your “improved” alternative suggestions speaks volumes of your own average level of sophistication trading options. Perhaps the average retail AAPL investor should stick with your “ideas” (one of which we note, is to sell the stock). If you haven't been able to move beyond using calendar spreads in the same expiration month, so be it.

    The primary premise of the article is that Apple shareholders want to keep their stock and protect it. It is simply false that the “intention to purchase insurance while actually collecting premium cannot possibly be achieved under normal circumstances”, as long as you don't mind the risk of owning more Apple stock at 270.00 per share. Our trade suggestion is proof of the fact. If you insist upon sticking your head in the sand, go ahead.

    “The actual benefit should the stock move sharply lower near term will not be all that great......” Likewise, your statement is false, not to mention vague. The September 330 put provides dollar for dollar protection from 330 to 270. Of course, if you think Apple will go substantially lower than 270 by September, you should certainly re-evaluate the trade. But if Apple declines no lower than 270, your stock position is completely protected.

    “......an extended sideways move or even a modest up move will eventually prove costly.” This statement of yours is also false, unless you are talking about doing the trade under one of your own “improved” techniques, all of which will cost you money, provide you no better protection, and in one instance will completely divest you of your stock. Under our suggested technique, extended sideways movement in the stock price will cost you nothing. If you can't grasp that, then you probably should sell the stock.

    The gentleman's suggestion below is fine as long as you:
    a) don't mind paying over $6 per share for the protection; and
    b) don't mind the risk of having your stock called away in August for 360.00 based upon a very pleasant earnings surprise.

    Again, we assume that Apple shareholders want the benefit of a pleasant earnings surprise in July, therefore, no August covered calls.

    There are many ways to trade. As we have said in some of our other articles, the only “ignorance” is the failure to keep an open mind and to thoroughly and continuously evaluate the alternatives. We've considered your alternatives and we like our strategy better. Thanks for the comment.
    Jun 26 10:40 AM | 4 Likes Like |Link to Comment
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