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inside man 55
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Strategic trader, interested in stocks with value and good growth potential, also interested in larger macro trends. I actively trade options and may buy or sell options at any time.
  • Apple Account Update 2 comments
    Aug 20, 2014 1:32 PM | about stocks: AAPL

    I am updating what happened in my 3 accounts concerning Apple. As a refresher, account #1 is buy and hold, account #2 is writing covered calls, account #3 is buying calls or puts only.

    Here is how the performed from when I started keeping track 8/11/2014.

    Account #1 - Buy and hold 100 shares AAPL 1 yr

    8/11/2014 $9,515.95
    8/20/2014 $10,049.00

    Total gain $533.05

    Account #2 Covered Calls

    8/11/2014 $9549.73
    8/15/2014 $9643.00

    Total gain $93.27

    Account #3 Calls & Puts - buy an equivalent amount of calls or puts to approximate the delta of 100 shares

    8/11/2014 $696.00
    8/20/2014 $1420.00

    Total gain $724.00

    I stopped Account #2 right away, I don't ever foresee this strategy being worthwhile. And this is after I thought #2 would be the winner in dollars gained after a year in my first instablog.

    Go Long Covered Calls Cash Secured Puts Delta matched Calls / Puts
    Commissions 1 4 3 2
    Taxes 1 4 3 2
    Upside Potential 1 3 4 2
    Downside Potential 4 3 3 1
    Dividends 1 4 4 4
    Total 8 18 17 11

    Items are ranked according to 1 is best, 4 is worst
    Lower Total is better

    There is no reason in my mind to use covered calls for capital appreciation, which is my purpose at this time. I learned this the hard way.

    My strategy going forward will consist of going long stock, going long calls or puts, or selling an item. I plan to focus primarily on calls and puts as I will match the delta of a stock only position but the
    amount of capital at risk is significantly reduced (inherent leverage of options).

    Disclosure: The author is long AAPL.

    Additional disclosure: Author may buy or sell AAPL or AAPL calls or puts at any time.

    Stocks: AAPL
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Comments (2)
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  • pocohonta
    , contributor
    Comments (637) | Send Message
     
    Covered call is used when you think it is not going down but also not going up by much and use key resistance as guide. Long call or put when you are convinced it will shoot up or down just before earnings. Own stock if it is trending up but not violently.
    I used covered call weeklys when I think it will pin on a certain strike, which it often does. I almost never go out more than two weeks because time decay on weeklys is rapid.
    20 Aug 2014, 10:54 PM Reply Like
  • inside man 55
    , contributor
    Comments (991) | Send Message
     
    Author’s reply » Hi poco, you are right in your comments, I just haven't had luck pinning the strike with covered calls, I therefore set the wrong strike, get called out, and miss further gains, exactly what happened with account #2 above. To me, I have undertaken the following strategy, buy long term LEAPS when I know the stock is undervalued and there will be a catalyst, but I don't know when. Buy stock when the underlying is volatile and I don't want to be whiplashed out of my positions but I know the long-term future is great.

     

    That's working for me, and what I understand is each trader & investor has a different mindset, and as long as we are making profits who is to say one method is better than another as long as we are happy with the results.

     

    Cheers and thanks poco.
    21 Aug 2014, 11:59 AM Reply Like
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