call spreads, sale of "out of the money" puts and Da VINCI all benefit if the stock runs.
However, many will close out some of these just before the close on 1/27. Others will not.
Remember if everyone is on one side of the boat it tips over. Have a balanced approach,
With options NEVER use your own money
If you are a shareholder and do not want to do the above...your money' your decision.
I never suggested buying puts...never
This past week, NFLX Jan 2016 $355 calls sold for $54 going into earnings. Some sold these before the earnings release. Happy with the $54/$348 = 15.5% return on the eve of the earnings release. Second day after release, NFLX ran well past the giveaway at $355 +$54 = $409 to $432.
Going into AAPL earnings, the same can happen. If you sold a Jan 2016 covered call for $12 to $13 a share and want 100 % upside action you can simply buy a Feb 6 call at present market price on Tuesday before close. The cost would be $3+. So the net tax deferred cash you keep is ($12- $13) - $3.50 = approximately $9+.
This $9+ is meant to be kept in your pocket not gambled away. IF you sold one Jan 2016 call for $12+ please do not buy more than one Feb 6 call for $3+.
This happened two years ago and it was a disaster. Why? Wall Street hates retail!.. One must always respect risk
This is a simple concept. You must own the stock to play.
posts are time and dated using real numbers not words.
Numbers are not open to debate
I did post to close out sale of puts if you did not have the money or desire to buy the stock....of course the Sale of the Jan 2016 $90 puts at $10 would have you buying the stock at $80..35% discount to market.
then AAPL with $150 billion is a big defender of their stock
Yes, the sale of covered calls are under water...so buy the Feb 6 cheap calls for a few dollars
Also post on two other web sites with what I cut and paste from here. So... 100,000
1. you own the stock and do nothing.
2. You own the stock then sell the rights to your stock at a forward date at a specific strike price. Your giveaway is strike price + premium. When deciding, pick a match that you are comfortable tying up your money. ( you can always close trade into a closer or later date) I prefer selling 12 month covered calls for 10+5 of present market price/ purchase price.
3. If you do #2 you can have 100% upside action by buying near term calls. In this case not Jan 30 but Feb 6. The cost will be $3+ leaving you $9 - $10 tax deferred cash in your pockets. If the stock runs, you have 100%
upside action. If the stock dips, you can close out sale of calls which will cover cost of Feb 6 calls or do nothing.
The entire board was bullish. they sold puts then used all the money to buy calls at a crazy multiple.
the idea of selling ONE covered call for $12 - $13 then buying ONLY one Feb call for $3+ is to keep $9 -$10 in your pocket as a 2015 return not cash to gamble with.
I would never sell calls on any stock for twenty five cents.
I prefer pocketing $12- $13 a share
Yes..one must needs to diversify
I come here every day to try to show how to reduce risk yet have a nice return through my Da Vinci and Renoir strategies.
Except for the call spread ideas neither one uses your own money but the market's.
Last year and this one, my ideas are based from "playing from behind". Pocket the gains then let the stock price catch up
I posted on Jan 21 after suggesting on Jan 20 that the spread was tightening
today the net is $3.20...a $1.20 profit on $2 since Jan 20...60%
Now the possible return is only $1.80/$3.20 = possible 56% down from 150%
$107 call ask was $4.05....$112 bid was $2,00...net of $2.05
Max profit is $5...today it is....? look