this is a 10% premium and gives you a giveaway at $120 + $14.97 = $135..if you hold the stock and sell one for every hundred shares you own
When Wall Street plays their game this is a defensive move...You are pocketing $15 a share..tax deferred until stock is taken or the trade is close out.
some have already pocketed the 2016/2017 trade for $28 - $30 cash per share at $130 strike price for a giveaway at $130 + $28 + $148 to $150
to the new people here.
If you own any stock you can sell the rights to buy that stock at a certain price (strike price) that expire at a certain time but can be taken anytime before that time by owner.
I use this Jan 2017 $120 call as an example...You own the stock and decide 415 tax deferred cash per share is great free cash flow...You must decide to hold AAPL until Jan 2017 (third week) or when the option expires..If AAPL runs past $135..any profit is lost but you still collect the AAPL dividend.
You are not locked into this trade...
Many use thee to off-set taxes as well but that is a different lesson. I have no time this am.
I have posted..IF too many people buy options, Wall Street will take it down. Yesterday was case in point.
You sell calls for $10- $15 tax deferred cash per share not buy them
two simple trades.
It really is a simple concept
What tax advantage..?
If you sell a covered call on a stock that runs past the giveaway: Strike price + call premium, you can close out for a paper loss but go further out in time at a higher strike price and sell again.
This puts more tax deferred cash in your pockets today. In Jan 2015 the Jan 2016 $100 calls sold for $10. These could be closed out and Jan 2017 $120 and higher can be sold. You keep the original $10 in your pockets plus more and lift your giveaway...
A very easy concept
typo..the Jan 2016 $110 calls sold for $10..they are now $9.50.
So people enjoyed $10 tax deferred cash at no cost all year...it is a simple concept
these should be closed out
these can be closed out, as well
This does not mean buying calls with your own money!
When stocks fall you sell puts for $10 to $12+. Puts 12 months out and below market price
It starts the day you originally buy any stock. Then you trade accordingly. Your tools are the Da Vinci and Renoir strategies
This year if you consider both I put not $28 to $30 but $38 to $40 cash per share in your pockets .
Here at real time and properly priced option prices.
No reason for any more posts this year
Jn 2015 AAPL was taken down...Jan 2016 $90 puts were sold for $10..now pennies
Aug 24 AAPL was taken down Jan 2017 $85 outs were sold for $10+...now $4.
Both were suggested here at real time.
Then the Sale of the Jan 2016 then 2017 covered calls for $18 - $20...
let's do the math...$18 + $10 + $6 = $34 per share
on a cost basis of $110 = 34/110 = 30.9% now but trade goes into 2017.
All my trades are ?motion in the ocean"
If you listened.