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Debbie.Sheperd
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As a broker for Worldwide Futures Systems I work with clients to develop a truly diversified portfolio. Traditional portfolios are exposed to equities and bonds and WWFS offers the opportunity to invest in commodities and currencies through managed futures trading systems. By only selecting... More
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  • Take A Better Bite Of The AAPL 0 comments
    Jan 17, 2013 4:19 PM | about stocks: 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
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