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Apple Inc. Message Board

  • rc3eagles rc3eagles Jan 22, 2013 8:39 PM Flag

    serious options question

    today the IV must have started out high for the out of money Feb 600 calls, because i bought then sold as i didnt like the drop back down under 500. i took a small loss, then a few hours later the IV must have really dropped cause the contracts went alot further down, even as the stock rose well above my sell price. at 504 the contracts i sold were lower then when i sold them at the stock price of 500 earlier in the morning.
    im trying to figure out how the heck to make this work without getting totally bent over.

    I "think" this stock could move 40-50pts after hours tomorrow.
    But as the IV is obviously going to drop, its hard to pick a strike that could actually gain in value, ive never seen an IV dance around so much, the IV dropping after the ER is a given, but this stock seems to have some sort of weird random floating IV, hell i dont know.

    given the gap im thinking we could get, im looking at the Feb 16th calls, out of the money.

    are the 600s to far out?

    anyhelp from the peanut gallery?

    I feel stupid asking this question because all i do is trade options, im not a rocket scientist at it but i was doing very well until i ran into this AAPL and have been getting my head handed to me. my fault of course but ive never seen a contract price drop, as a stock climbs. its bad enough seeing a contract drop as the stock drops, but something just doesnt add up here.

    what am i missing other then the $5,000 i lost today.

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    • The 600s are too far out. How much are you prepared to risk on this? The real money on your bullish view would be to do one or a combo of the following:

      (1) sell just OTM puts (feb1 or 16 exp) and buy puts deeper out (weeklies). Big net credit. You can take the net credit and then buy a ladder of calls from just out of the money calls to a few deep otm. You can also mess with the exp. The farther OTM will need Feb 16 at least

      (2) the other play you could make, is a claendar spread on the call side. Sell OTM expiring weeklies and buy Feb 16 calls at the same strike. Then IV doesnt necessarily hurt you and time value helps you. If the stock moves against you, you are a bit hedged. If it moves with you, you have to decide how you want to play (cover your short call, close your long call etc. -- the timing can be tricky, but you won;t lose money). You can do a calendar call spread and also do the put vertical spread I described at (1).

    • Manipulation by MM. Last week it closed at 500 exact. No matter who explain how natural this is, I don't buy it. Remember the WSJ paper the previous Monday? Compared with today's VZ and T data, total BS. But they still ran it to spread rumor, just to push AAPL down.
      The bright side is that there is definitely market inefficiency here! Just compare AAPL with GOOG, cash, P/E, growth, etc. AAPL beats GOOG. Eventually people will realize how undervalued AAPL is.

    • The uptick in stock price didn't beat the "downtick" in time-value of the option.

    • I picked up 50 contracts of the Feb 16 600 calls avg price 1.70. Agree might be about to get my head handed to me, but I figured might see a nice bounce in the next week and it was worth a shot. My game is scalping NTM weekly calls, so this trade is way outside my comfort zone. Sorry for not addressing your question

      • 1 Reply to jimmything69
      • to trade hundreds of times thru out the year, make a ton of money and to come here and see something im not familiar with, is puzzling, oh i know its gotta be the IV thats adjusting, what makes no sense to me is whats triggering it?
        im willing to bet tomorrow the contracts your holding will be up in the morning and keep dropping as the stock climbs again. i mean what the FK ?

    • Hi. Welcome to the AAPL board. I am a seasoned investor who has made millions with Options trading. I can help you. Please deposit all your money into my account, where I will trade it for you. Soon, you will be rich! All your friends will envy you.

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