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Take A Better Bite Of The AAPL

|Includes:Apple Inc. (AAPL)

AAPL Options Trade:

1. buy 100 shares of Apple stock at $505

2. sell 1 JAN 2014 $505 call for $61.50 and

3. sell 1 JAN 2014 $415 put for $29.

Take in $90.50. from the premium.

Reduces out of pocket cost to $415 (505 - 90)

then if stock stays at $505 you make $90 on a $415 investment or 22%.

If stock drops $90 you don't lose.

If stock drops below $415 you will own 200 shares.

Flat you make $90 or 22%

Down 20% or $90 you don't lose.

Up 30% you only make 22% for one year.

If stock dropped 10% you still make 10%.

If you bought the stock without the options at $505 it would have to go up to $615 to make 22% on your money. Now the stock can stay at $505 to make 22%.

And if you bought the stock at $505 and it dropped to $415 you would lose $90 or 18%.

Options, properly structured are indeed less risky than outright stock ownership.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.

Stocks: AAPL