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Apple Inc. Message Board

  • Jan 27, 2013 10:43 PM Flag

    AAPL Options Advise - Seriously Replys Only Please

    Ok, I know…by throwing this out to the Yahoo peanut gallery I’m setting myself up to take abuse from some of the sociopaths and half-wits on this board ---but some serious, insightful feedback would be most appreciated.

    My situation
    200 Shares purchased at $547.
    Present Price $439.

    Obviously I’m taking a serious bath on paper. Having just enough knowledge about options, but not a mastery of the game by any means, could send me into some serious deep waters if I act irrationally.

    Any options strategies that anyone could recommend to safeguard my initial outlay? This is without a doubt a rollercoaster ride. Can’t say I’m having much fun at the moment. ;)

    Thanks Guys. I know there are some cool people on here. I’d love to hear from you.

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    • To get a reasonably inteligent response, please state clearly if it's a regular acount or an IRA like one.
      IRA restricts what you can do with options.

    • So how did this work out?

    • What did you end up doing?

    • Forget what you paid. You must decide for yourself do you want to buy Apple at the current price. If you believe this a good entry point then buy some protective puts and sleep well. However if you feel you would need to see a lower price to buy then sell now and come back when the price is right for you. Only you can decide where you think it will be.

    • Wow, my faith in these boards has been restored, there are a lot of smart people here. I am in very similiar situation. In general they say averaging down is a bad thing but if you have the $ why not buy some more shares? I bought 25 @ $444. on Friday. To give you an idea that you dont have it that bad my average is $550. and I have 300 shares. Believe it or not I'm not worried about getting my $ back. The problem is it could take a year or more. The best advice I can offer is the one I didn't follow: Always put stop loss in at 8% below your purchase price. Traders are wrong 50% of the time but they cut their losses and let the winners ride. Good Luck

      Sentiment: Hold

      • 1 Reply to oldslur
      • Jan 28, 2013 12:35 AM Flag

        Yep.. i spaced out on a stop loss order because of the earnings announcement after hours. I think the price would of ripped right past my stop order and not initiate it. But I don't know for sure. I think i would of stopped out a the open of the next trading day, at a much, much lower price. Unless I'm seeing that wrong.

    • Sit tight for a hot minute....wait for this bounce on the China Mobile news before selling covered calls. :-)

    • if you have holding power, i won't worry for $547, but you should sell some covered call at your cost-level for near-term. usually, it take 2-3 days for a major sell-off first to cool-off, then the stock need to find its bottom, the first rally is usually a false one and subject to re-test or consolidation, you may want to grab that opportunity to sell the calls since it is subject to time value decay. sometimes, a strong bottom can be made within two weeks, it is hard to tell. but if AAPL can cross $485, it will be the first sign...eventually, if it can cross 525 and stay above, the bottom will be considered completed, many major value fund will buy, my personal view is that whoever need to sell should have sold already, there are lots of sell-program geared-up now, but they are not loyal to their game, once it stops going down, they need to pull out soon, if there is no greater fools, the fools will run. i won't be surprised if there is buy-program waiting to make a killing too, not speaking of the value fund, how can they resist the temptation.....? there is not many stock left that is trading at such kind of solid value proposition.

    • Like others, I would suggest covered calls. I like to sell weekly calls on big rips. For example if Aaple popped 15 tomorrow I would sell calls that are not too far out of the money. The obvious risk is that if the stock went on a huge run you would be called off of your shares by weeks end. As volatile as this stock has been lately, you don't have to fear that scenario as much. This stock pops $5 and ends down 10. It may seem to be unconventional , but it does help make back losses on a weekly basis. The premium on weekly's is ridiculous and you can collect on the hedges pinning this stock every week.if you intend on a strategy like this, I would suggest looking at max pain for the weekly's so that you have an idea of where the stock will end.

    • Wait for the stock to put in a bottom and then sell to open the JAN 2015 put options some what below the bottom stock price put in by the stock. Only 2 things can happen the options you sold will go down in price as the stock price moves up and you can buy to close with a profit, or the stock will be put to you if the price drops to the strike price sold; at which time you have lowered your price point by the amount of premium paid to you. You will still collect the divy on the stock you hold while u wait for the stock to move up.


      • 1 Reply to xquestor
      • What kind of trade is this? If the stock is indeed falls, he would be forced to buy another 200 shs of AAPL on the naked puts? Can the op afford to buy another 200 shs? What if the 200 shs he got put to drops further? He's in a bigger hole! I had short puts @ 475, 470, 460, 465 for this friday. I closed out my position at a 8k loss because I didn't want to own AAPL with all the negative sentiment.

        Op, either sell covered calls, knowing if AAPL pops beyond the call price, you won't partake beyond the strike price. Buy Puts, but it very expensive for ITM puts. Sit tight with your holding and wait it out. Close out your position and move on. I've been where you have been and don't envy where you are at. Good luck.

    • safeguard your outlay? -- so obviously you have been advised here that you should consider selling out of the money covered calls. That is not a safeguard so much as a cash generating possibility.

      Others have recommended buying puts. This is a safeguard (presumably two contracts to protect your 200 shares), but is also a means to lose money as the stock rises. And figuring out which expiration/strike is kind of guesswork.

      My recommendation is this, work a "costless collar" using weekly or now you can use two weeks ahead options (I would use the latter because of higher premiums/lower commission costs). To do this, you sell 2 out of the money call contracts. If you use two week expirations, I would say use 20 to 25 point out of the money strikes. Then take the credit you get from those calls you sold and BUY the equivalent value in puts (you can just buy two puts, or may be one that is very close to the money etc)

      If the stock surges, you don't have to close, your shares will just get called away. If the stock is out to expire with your put position in the money, you need to sell unless you are okay with purchasing 200 more shares.

      In any event, this is the best way to protect your position without shelling out cash every week. Your only downside is that if the stock does surge 50 points or whatever, you will miss out on the portion that is above your selected strike.

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