Seeking Alpha
  • Common King
    looking for information on buying T's... have never done it before, I like $AAPL, $F, $INTC '14 calls... any advice?
    3/10/12
    Reply (14)
    • campusglass: I like the F leaps too. Following this thread.
      3/10/12
    • Ricardo Espinosa: F Jan ´14 leaps look great, I´d buy the $12 strike, $2.58 each, for AAPL I´d go spread because they´re EXPENSIVE, $77.10 for the 600 strike
      3/10/12
    • Ricardo Espinosa: & $35.10 for the 750 strike, buy the 600 strike and sell the 750 for a net debit of $41.33 ($4,133 instead of $7,710), upside $10,867 each.
      3/10/12
    • Ricardo Espinosa: That´s how you reduce theta decay.
      3/10/12
    • Common King: I was thinking the same on F, Jan '14 $12 strike. When is the best time to purchase the LEAPS? Should I try to wait for a volatility spike?
      3/10/12
    • Common King: I was also wondering about buying call LEAPs and selling put LEAPS. could you offer any insight on this? Thanks.
      3/10/12
    • Ocean Man: You want to buy the calls when volatility is low like now and sell the puts when volatility is high.
      3/12/12
    • Ricardo Espinosa: Common: never purchase LEAPS when volatility is high, the Black-Scholes formula very clearly states higher vol=higher option price
      3/12/12
    • Common King: The VIX at 15~ seems like a good entry to me, historically we seem to be in a very low volatility period right now.
      3/12/12
    • Common King: Thanks RR, that was what I thought, however, F at $12.50 and $12 strike options are in the $2.50 range...a voltility spike and drop in stock
      3/12/12
    • Common King: price is going to make those options go up?
      3/12/12
    • Common King: XRX calls look cheap too.
      3/12/12
    • Ricardo Espinosa: That´s right, volatility will cause options to rise in price, both calls and puts, and it´s kind of "protection" against theta decay
      3/12/12
    • Ricardo Espinosa: but unless volatility it rises above 60, it´s unlikely to absolutely counter strong drops in price, it balances it out, kind of.
      3/12/12