I am bearish on markets but think apple could have a 50 pt rise still in it. Looking at deep in the money options like a July 400 call for about 50.00 bucks, or 5,000 per contract. If apple did pop to 500, I darn near double my money. A gap down of course could take a big junk of my money but an orderly decline would allow me to exit maybe with most my money intact. Seems like a reasonable risk reward play. Am I missing something? Tia.
i played a weekly 415/430 spread this week with 30 contracts but capped profit . ilegged into a july 415 call and sold 485 june against so there is some upside but apple has had trouble with the 45 0 area last three attempts so be nimble
I see the merits of this if buying close to or out of money. But I go 90 percent in money i think longer term thinking has merits too. I know it is not an easy thing to be consistently successful with.
I had not looked at his stock in a long while. Nice move off what appears to be a bottom at least for now. On any pullback that looks like is holding I may consider a position. Weekly chart suggests to me might be headed for 100, but I am not very good at such predictions.
I following a similiar path. I bought jan 350 calls and sold June 425 and 430 about 3 weeks ago. I also bought a jan 400 put and sold june 375. Buying ditm calls is a good ideas, I try for at least a 80 delta and watch the iv . currently apple vols are low. Stay away from earnings either long or short. I am thinking of moving my long put up to 420. My goals are capital presevation and then appreciation. Good luck
Deep in the money options are a great idea.... But you have to go out at least 1 earnings period. The day before earnings, the next month option will have around $20 premium. The July expiration will almost certainly happen before earnings. So pick up the August or October ... Or like nesmith go to jan and get 2 guaranteed earnings reports. I have August, October , and January 370 ( keep the premium below $10 or better yet $5). That way if aapl drops $80 before earnings you still have an option worth $20 (more if it happens well before earnings eve). If aapl goes up more, you can roll the option up or out... If it goes down you can roll them down for $7 or $8 for $10 of strike. Good luck
Thanks for this reply. I am beginning to think deep in money options, not just for this example with apple but for other situations may be my best form of trading to leverage a small amount of money until it becomes a bigger amount of money. Have not employed this strategy before but beginning to see its merits. I know there are still risks but seems to be my best bet for breaking out and accumulating a decent level of funds where then I could employ various strategies including outright buy of high priced stocks such as apple.
I bought the Jan 14 405 calls last week and have been quite satisfied. But I was lucky, and still have a lot of time to run. If you have a longer term view that is not event driven, you need to go for a longer expiration. The implied volatility on the longer dated options make them comparatively good value.
Pay for the extra time but without looking, I am thinking if go deep in money, the incremental cost for the extra time might be an attractive trade off. Give up some potential profit on a 50 pt move, but have longer to get there.
The safer play I suppose but what I am trying to do is leverage a limited amount of money. I know I don't have to tell you, but 5000 only buys 11 shares. I couldn't even sell a single covered call contract could i, and would not get much if I could. And, a 50 pt rise in stock gets me 550 vs 5000 if I buy the option and we get the 50 pt rise. Thanks for responding either way.