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chanthirani

chanthirani
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  • How Apple Gets To $400 A Share [View article]
    "It's worth pointing out that investors can use options to guarantee a $400 entry point; the January 2014 435 put is currently bid at $34.75, offering an 8.7% return, while the January 2015 490 put is bid at $90.25, offering a 22.5% return (10.7% annualized). But those strategies would miss out on any upside moves from current levels. Investors would be better off taking the risk, because right now it is clearly outweighed by the rewards."

    Actually this is a very good strategy if you are bullish on AAPL. You sell the put option, wait for the share price to go up, then buy it back at a cheaper price. You will not own any AAPL shares but you will get a decent return on your investment.
    Jan 14 07:45 AM | Likes Like |Link to Comment
  • A Calendar Spread Strategy To Capitalize On Apple's Expected Announcement Next Wednesday [View article]
    "I may be a little slow in answering comments to this article. I hope your will understand."

    Thank you for putting the actual trades up. Based on your last article in SA, the discussions were actually very informative.
    Sep 7 11:19 PM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    Agreed. Wish more discussions on articles were like this. There is one article I commented on in the Macro View section that has turned into a Democrat-Republican name calling slug fest.
    Sep 7 02:41 PM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    Not sure I understand your question. Are you talking about:
    a. buying spreads that are about $50 in the money (ITM)?
    b. Selling puts about $50 out of the money (OTM)?
    c. Buying or selling spreads with a $50 difference between strike prices?
    Sep 6 03:28 AM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    True. But then again by going far out in time, if the trade goes against you, you have more time to recover. You won't hit many home runs with this method but then again you won't be striking out so much either. What you will be doing is getting lots of singles and doubles.
    Sep 5 11:06 AM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    @schutan,

    To reply to your questions:
    Con point 2. If you do a debit vertical spread, there is no margin requirement as your maximum risk is the amount of money you put up to initiate the trade. If you do a credit vertical spread, yes, the margin requirements are as you stated. This is because when you initiated the trade, you received credit i.e. money up-front. Now what happens if the trade goes against you? The broker then holds the value of the spread as a security against the trade going bad.

    Con point 3: To avoid the call you sold going against you, close the trade. You can either close both legs, one at a time (buying back the sold leg first to avoid margin requirements) or close both legs together as one trade. There is no need to hold the trade right up to the last second.

    Hope this helps.
    Sep 5 05:00 AM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    @baraka101,

    Vertical call spreads can be divided into credit spreads and debit spreads. For debit spreads, the maximum risk is the initial amount you put down to initiate the spread. For credit spreads, the maximum risk is the difference between the bought leg and the sold leg less the credit received. Whether it is a long term or a short term vertical call spread makes no difference to the maximum risk.

    For a single calendar spread, the maximum risk is the amount you put down to initiate the spread. For multiple calendar spreads, the maximum risk is the total amount you put down to initiate the multiple calendar spreads.
    Sep 5 02:36 AM | 1 Like Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    @arpatel7140,

    There are a lot of newbies reading these articles. You may want to be a bit more explicit.

    Yes, for a 20 point spread, you need 20 dollars less the credit received to set up your position BUT spreads are done with options and 1 option contract is for 100 shares so you actually need 2,000 dollars less the credit received to set up the trade. Then once the trade is set up, you need to maintain 2,000 dollars in your account for margin purposes since this is a credit spread.
    Sep 5 02:29 AM | 1 Like Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    When you say "open put", I assume that you are selling the puts naked. In that case, your strategy is called "cash secured puts" and you require margin. According to my calculations, at $455 or $460, the amount of margin needed is about $23,000. Admittedly this is much less than the amount needed to own 100 shares of AAPL but it is still a hefty amount for the average investor for one trade.
    Sep 4 06:48 PM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    Just checked the AAPL option chain. You can buy the 620-625 Feb vertical debit bull call spread for $3.90 = $390 for one contract. I myself would not trade that due to the wide bid-ask spread. (Bid $2.25 - Ask 3.90) but you have the potential of making a 20% gain by Feb as long as AAPL is above $625.
    Sep 4 01:48 AM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    Good point.
    Sep 4 12:38 AM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    That's interesting. I was long the Jan 700 calls but I closed out my position about 2 or 3 days after the Samsung verdict when I noticed that APPL was not going up any more.

    You don't have to wait till you get close to expiry. An option is a wasting asset so my bought options are normally at least 2 to 3 months out. My sold options are always front month.

    In the case of APPL, I just went long calls due to the high price of the stock. In the case of cheaper shares, I tend to do covered calls. That way I don't have to worry about the bid-ask spread on my bought options and I don't have to worry about rolling my option position.
    Sep 3 07:08 PM | 1 Like Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    "What he is suggesting is buying the October 665 put, say and selling the options expiring Sept 7th."

    I forgot to say that the options expiring Sept 7th should also be the same as the bought options i.e. 665 puts for this to qualify as a calendar spread.
    Sep 3 01:48 PM | Likes Like |Link to Comment
  • 2 Strategies For Making Extraordinary Returns With Apple Options [View article]
    @Aramamni,

    No. You got it wrong. A calendar spread is two options sold at the same price but with different time to expiry.

    What he is suggesting is buying the October 665 put, say and selling the options expiring Sept 7th. The advantage of calendar spreads is that the net debit you pay for the spread is the maximum you can lose. On Sept 7th, if AAPL is still above 665, he will buy back the sold put for pennies and sell another 665 expiring Sept 14th. Then on Sept 14th he will repeat the process. Each time, the weekly option will have a time decay greater than the monthly option that he bought. So he is selling time decay. The monthly option that he bought is his hedge against a sudden rise or fall in Apple shares.

    Hope this helps.
    Sep 3 11:13 AM | 2 Likes Like |Link to Comment
  • Apple's Q4 Depends On iPhone Release [View article]
    I am a traveling warrior (though not corporate) and a heavy duty laptop user. The reason I have not bought a iPad is because I depend on my word processor and spreadsheet so much even while traveling.

    What you say sounds interesting and I will definitely check it out. As a cynic though, I would question the ease of use of a word processor on a tablet. I need those big keys on the keyboard. Same with a spreadsheet. The tablet might be OK for occasional users of MS Office but for the real warrior, give me my laptop.

    Aug 28 11:03 AM | 1 Like Like |Link to Comment
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