2012 RECAP...$125 in your pocket already...want another $80 or $130?
Since last Spring, I have been recapping three trades.
When AAPL hit $600 I said to sell the Jan 2013 $600 calls for $80 - $100...these are now $2+. However I did say to close these out t $40 this past Summer then sell the Jan 2014 $600 calls for another $80+..for approx. $125. THe Jan 2014 $600 calls are now $42..so $28 profit if closed out here.
If closed out one has to pay taxes and is walking away from a $680 giveaway..with $40 already in your pocket . so in actuality a $720 giveaway.
Here are two NEW options:
1. Sell both sides of the Jan 2014 $520 strike price for approx $150.
$520 - $150 = $370... BUy a $290 put to hedge the sale of the $520 put....this will make it tight
This a MUST to make this work.
Your stock has the sale of the call covered.
the giveaway on this alone is $520 + $130 = $650. But if you add the previous $80 then it is $730
2. Sell the Jan 2013 $520 call for $76 alone.
Your giveaway is approx. $600 but is you add the previous $80 ...you walk away at $680 for four trades on a year...no matter what AAPL is on Jan 2013
These are two scenarios but the list is endless..some stagger strike prices....If so, NEVER mix oranges and apples...always stay in the same time frame.
Regulars remember I first introduced the sale of both sides of a strike price years ago when AAPL was $365...The total then was $160,,,$80 each for the call and put....all year no matter what the stock did the option see-saw with that $160 - cost of the hedge put. Ultimately, it was a great call