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
Total gain $533.05
Account #2 Covered Calls
Total gain $93.27
Account #3 Calls & Puts - buy an equivalent amount of calls or puts to approximate the delta of 100 shares
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.