Sunday, August 21, 2011
Here comes Monday
HI all, I have been busy with some projects so I have missed much of the conversation.
Next week is going to be interesting with Libya maybe falling? If so, oil should drop and maybe gold and that means an up market. We will see. I still have my AAPL Jan and I have rolled the Aug calls into Sept. I am hoping that aapl makes a good move pretty soon. It is one of the best performing stocks on the exchange and the low PE has got to attract the big players. But then who knows. Come Oct. the calls should head up as we get close to earnings. AAPL will blow them away again. I can sell the Oct, Nov Dec and Jan so plenty of time if all goes right.
I still have some POT and the same plan with them. I also still have some V with the Jan 90 so I will be selling calls soon with those.
I had some 355/360 apple spread and I rolled them down to next weeks at the 335/340. I expect more strikes to be offered soon.
I still have no feeling for the SPX etc. With Europe just too much of a gamble either way…
Good luck all and don’t just trade. Trade with a plan on how to cover or roll or hold. But do have a plan with good stocks.
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56 comments:
@Jerry
Are you sill selling the calls on AAPL even at the current reduced premiums? Seems like at the lower strikes, maintenance requirements increase quickly tho I can't exactly figure out the formula. I assume it is because we are now so far away from the strike on the held Jan calls (I'm at 385/395) Does this make sense?
A few days ago I sold the AAPL Sept 405’s for 9 so I jumped on those. It means I can't sell weekly's until then unless I juggle them some.
The danger of selling strikes lower than the bought calls have some problems...
1. The stock you are using makes a big run during the month and then you have to rollout.
2. Maintenance is needed if you drop below the level of the bought strike.
I have a bunch of the Jan 400's and some 395's. Today I will sell the new calls for the 395's that expired on Friday.
For me it is a matter of believing in AAPL, as it has two chances to make a run towards earnings.. both Oct and the Jan’s. So while waiting for those ‘hoped for’ good times, I am selling calls and lowering my initial cost of buying the Jan calls.
Opened another SPX put spread for wk4. I wanted to get far away so i sold the 975/950. Approx 140pts of cushion when the trade went thru. The furthest away 5pt spread was 1030/1025 and 8% cushion from last fridays close was too close in this market. I will watch closely since i managed to get 0.25 (usually this far out you get 0.15 max)on this spread and that indicates that the options "people" see some liklihood. Good luck Fulgore this week.
RHM
correction 165pts cushion (spx at 1139) when trade went thru
@rhmoptions, I will be watching the markets today to decide if i want to get in or not on Monday. I will most likely get in on Tues Wed again.
I feel like we've been down this road before, but a little review never hurts. There are few things with regards to trading the markets that are black and white with no shades of grey, but the rules surrounding SPX traded options are one of them.
1. SPX weeklys and quarterlys are PM settled
2. SPX monthlies are AM settled
3. ALL SPX traded options are European style (weeklys, monthlies, or quarterlys--it does not matter, they are all exercised European Style)
This information can be verified off of the CBOE web site. I also called CBOE to re-verify this information. I also asked them if there was any chance of SPX traded options to go to "penny increment options" and the answer to that is "probably not". It would be nice to be able to close out short SPX positions by buying them back for a penny rather than a nickel, but it looks like there is no chance of that happening...at least for now.
Hi DaveG,
Thanks for pointing out the rule #3 on all spx options are European style.
TK
Jerry - You definitely have the luck of the Irish... I STC my AAPL SEP 395 today for $2. I paid $22 in early-July. Granted, 3 mths was not very far out, but the Jan 395 calls were around $58. Today they are $19, or twice the dollar loss ($20 vs 39) of the SEP calls.
My GOOG and AAPL long calls each lost ~75%. Some were DEC-11. The Cal's just don't hold up in a down draft. GOOG has lost over 140 pts in a month. OUCH...
Proceed with caution folks!!
rick
@Dave G, Hey I know I read this all before but can you confirm (because I am having an argument with a gentleman at work here about this)
Stock - Weekly Options during the 3rd week of the month (these would now be a monthly option) expirey time AM or PM?
Index (SPX, IWM) - Weekly Options during the 3rd week of the month (these would now be a monthly option) expirey time AM or PM?
@fulgore
Stock: pm. Can trade options until close friday like any other week.
Index: am. Can trade options until close Thursday
Rhm
@rhmoptions, thanks for the clairty.
@All, just opened a position on the SPX.
SPX put spread - 1030 / 1025 - Premium = .20
I put in .15 put ToS gave me .20 NICE.
But this also concerns me. This return is a bit high for me. 3 days left to trade and 102 points of cushion. Friday will be the big day for movement with that announcement coming out.
Since the return was high I will keep an eye on it.
Fulgore,
I'm going to make three categories here to answer your questions:
1. Stocks and most ETF's
2. ETF's not included in #1
3. Index options
Question #1: Stock - Weekly Options during the 3rd week of the month (these would now be a monthly option) expirey time AM or PM?
Answer: These fall into category #1 and cease trading @ 04:00 PM EST on the third Friday of the month. The monthly options on these underlyings do not officially expire though until 11:59 PM EST the following Saturday. The "bottom-line" answer to this question is: PM
Question #2: Index (SPX, IWM) - Weekly Options during the 3rd week of the month (these would now be a monthly option) expirey time AM or PM?
Answer: We need to separate SPX from IWM as they are different types of underlyings. IWM falls into category #2 above and SPX into category #3. Category #2 includes the following ETF's: DIA, EEM, IWM, QQQ, SPY, UNG, UUP, XLB, XLE, XLF, XLP, XLU, XLY. These ETF's can be traded an additional 15 minutes after the markets close (and this includes the options on those ETF's). Same as category #1, the monthly options on these ETF's do not officially expire until 11:59 PM EST the following Saturday. The "bottom-line" answer is: PM.
NOTE: To get the official list of what trades during what times, you can go to this URL: http://corporate.nyx.com/content/nyse-arca-options-00
Answer: The monthly options for category #3 (Index options like SPX) cease trading at 04:15 PM EST the Thursday before the third Friday of the month but do not settle until AM the following morning (Friday). The "bottom-line" answer to this question is: AM
The rules for option expiration on the weeklys are the same as the monthlies except for stocks and ETF's, they officially expire at 11:59 PM EST on Friday (not the following Saturday as the monthlies do) and the SPX weeklys expire PM not AM as the monthlies do.
@Dave G thanks for the clairity even more.
@rhmoptions what do you think about my position?
@DaveG
Great research and answers. Thanks for the clarifications.
@DaveG
I was wondering if you were still able to use your GIGO method during the recent downtrend. Since volatility spiked did that offer more distant strikes?
Thanks
@ Fulgore
You have 12% cushion based on todays close. I can speculate that in three days the likelihood of it dropping 12% is probably less than 1%
good luck
RHM
@Jerry, I've read up on some of the earlier posts and I'm a bit confused with some of the things regarding diagonals. You mentioned sometimes earlier that it really doesn't matter to you whether the short call goes into money or not, as your bought JAN call will then increase as well.
But I see two problems that makes this less desirable:
1) When your short goes into money it obviously won't expire and you loose that expected income.
2) Even if it is true that the long goes up as well, you won't see any gain from it since the rising value of the short negates all of it.
I guess what I'm trying to understand is how these diagonals can make you money unless the stock price stands more or less still, since a drop really gives the long call a beating and a rise is negated by your sold call? You also said that you get between 1 and 5 points on the sold call but as someone said earlier, that only applies to the closest strike above, which then means you will end ITM in perhaps 50% of the weeks?
This is not meant to be critique in any way, I just don't understand how it works, but according to your posts you've only done this a few weeks so perhaps this is something you are finding out right now? Some of you responses seem a bit vague. Since after all you are the guy behind the blog, I hope I'm not rude for asking about your results so far?
And by all means, if anyone else have good answers or experiences from this I would love to hear them.
@ John logan I am not a pro by any means but I have traded diagonals a few months so here goes. You said
1. When short goes itm it won't expire and you lose that expected income,wrong all options expire on the expiry date , as for income that was realized when the short was sold , now if adjustments are needed it may cost more than you sold it for but you still received that premium.
2. rising value of the short negates gain realized by the long.
This is where you can burned with these things if not set up correctly and also if you don't monitor the trade closely. I have learned the hard way and lots of reading how to set up the trade so it won't lose money if the stock jumps. Assuming you have selected a good stock the delta of the long call should be .70 - .80 and the delta of the short about .20-.35 this will result in a bigger debit but it allows for a big runup in the stock price, by the time the short is getting close to itm the gain in the long will more than pay for buying back the short. There are several ways to do these but this way you will profit in sideways and appreciating markets and only lose in down markets. Just today I listened to a webinar by Brian Overby at Tradeking and he sets up diagonals this way. I hope this helps some, as I said I am not a pro but I have done pretty well trading these.
re: diagonals I should have also said if you do these and the stock does runup and you have a nice profit even if the trade has been on just a few days, take it from me close it and book that profit. I have two trades negative that were up big just 3 weeks ago. i got greedy and thought well I'll just keep selling calls for a few more weeks and collect that prem. then close, you can probably guess what happened . Oh well live and learn .
@James. Thanks, what I meant with 1. was that it won't expire worthless, so that I will have to buy it back.
How would you set up for example Apple right now?
Diagonals are quite a beast to understand. I started following Jerry at TradeKing's forum and was intrigued by the 'crumbs' method. It made perfect sense to me, catching small leftovers under the radar, to small to notice for the big guys. What really got me hooked was that Jerry had done this for 13 years, so there certainly were empirical experience.
Now Jerry has thrown us a new bone, and since he seems very excited I've been hoping this would turn out to be another great and relatively safe way to generate some money. However, I found this bone considerably harder to chew in my case. It seems to come down to mentality and how one approaches the trade. Compared to the crumb method, this is more the other way around, the trade is around the long call, which you then finance by selling calls against, so you really have to believe in the underlying stock long term. The strategy is also disrupted if your short call goes in the money.
This is how I see it using the ever popular AAPL as example: Buy the long call three, four months away and about 10% ITM to get a delta around 0.8 (80% parity with the stock) and sell shorts just OTM.
NEUTRAL> No problem. You will get your short call income as it expires and can do the same next week.
RISE> You will get the gain of the long call and when the deltas of the short (if now ITM) and long match you liquidate the position. You gained a little but lost out if the rise was big. Better luck next week.
DROP> This one is where you have to swap mentality. You now see this as a long term holding until it reverses. Shouldn't be a problem if you believe in the stock but you may have to roll if your period was to short. This is where it really makes sense to pick a deep ITM option, at least 10% down, or you won't be able to continue selling calls against it.
Well, this is my take on it, did I get it approximately right, Jerry? James?
Nic your thinking the same way I do
John as for AAPL I think I will wait for a litle more stability in this market before I put on any more trades. But normally i would look at Jan12 355 which seems to be a pretty strong support level , AAPL is a different animal due to its strength so you don't have go as deep itm, the problem is that call was 45.90 today delta 63. I sell the weeklys so thurs or fri depending on the market i would sell next weeks call about 3 or 4 strikes otm they are usually around 2.00-2.50 and delta about 20
Be very careful here I read somewhere that the GDP numbers to be released thurs am are now fri am? then Bernanke speaks later on Fri. This market is almost entirely news driven right now so some bad numbers or comments could send it down big or vice versa.
So here's another take. Seems like this discussion is missing the value of rolling the short term call. In a rising market, as the sold short term approaches expiry all of the time value erodes out. If it threatens to go ITM, the next weekly should be available with additional time value. When you roll to the next week at the same or higher strike, the transaction generates a credit, ie you are selling additional time value to somebody. And it works well as long as the market is neutral or ascending. Eventually, your short strike will not be breached and you can close the position. If the market drops rapidly as AAPL did last week, the only place to find decent premium is far below the long strike. This requires maintenance, and the maintenance can change if the value of the short erodes further, generating a margin call. I found this out the hard way last week. What I was able to do tho was roll the short to the next week, generating enough cash to cover the margin requirement. Then the market reversed and allowed me to close BTC to close the short leg at a small profit. Just lucky I guess cause I didn't and don't really know what I'm doing. I just plan to continue to maximize the proceeds from call sales and hope AAPL approaches my 385/395 Jan by then. Learning on the ground from experience, sometimes it even works out!
I failed to mention that if the market goes down on the underlying, you can also sell or roll out further in time, ie sell more time value to someone, thereby generating decent premium. See Jerry's post above.
Excellent points from all!
My opinions on this are all based on paper trading and a lot of assumptions, so it's great to hear from someone that have actual practical experience. I hope to go a little deeper ITM for a better delta and distance if there should be a drop, so I need to find a way to make sure I get that extra money back when I sell or roll.
James, have you considered going three months out instead of the JAN call, and instead go deeper? Interestingly enough y small studies indicates that the time decay is comparable in actual dollars even though it percentage wise hits the shorter one harder since it is cheaper. I will then roll the long call every month.
Safe, good point about rolling the short call, that is indeed a crucial part.
Safe, on your follow up comment, do you mean the long call? Rolling out further on that one will cost you debit, right?
@Nic. Yes if you were to roll further on the long you would incur a debit. But if you sell the short further out like Jerry did above (he went to the next monthly) you can get a FAT credit. He says he got 9. My numbers are a little different and I didn't do it as well but got 6 today on the Sept 17 right at my long strike. It closed at 7.10 tho but I wasn't able to birddog it all day so left a limit order which got filled at 6. Have to watch this unfold to see the 'end game' more clearly. Nothing like playing with the retirement funds to keep your attention.
Wow, that's a almost a month out, but great premium.
I guess the thing is, if I could afford it I would rather buy a couple of thousand AAPL shares to keep for a year, as I'm having a hard time seeing them not going to 500, and then sell covered calls every week.
In other words, the real trick for me is to find the optimum combination of option period, when to roll them and how deep I have to go for a reasonable delta, in order to minimize the effect of time decay and delta, and come as close to a real stock substitute as possible.
Anyone knows how? :)
Hi all, I must admit that there is no 'sure way or done deal' as for as profits using options. I have sold the Sept call on AAPL & on V and on the POT that I have. I did this to maximize the monthly return, I also did this after a lot of 'thinking and guessing'. The guess is what if AAPL etc. makes a run and instead of doing weekly's, I would have to hold on for a complete month instead of selling the weekly’s. But when I did the Sept's I received 9 on the aapl's and with 4 months left to sell more after that, I figured that is a good return. One lesson i should add is, do not sell the calls below or at the same strike that you bought the Jan's etc. Always leave enough room for the stock to move up and if it does cross the sold strike, it has long passed the bought strike. An example, I have lots of the 400 AAPL bought strike. I am selling the sept 410. With POT I have the bought strike at 55 so I sell the sept 56.6 strike. The reason is apparent, if the stock makes a move and passes the bought strike, then that strike will not only maintain lots of time prem but will appreciate more and more with time value and the higher sold strike will lose its time prem.
I know it is kind of confusing but instead of selling weekly’s at a low strike and incurring maintenance, go farther out and sell a strike a little higher than the bought strike. I also like selling the Jan’s as with AAPL that gives two different runs at earnings. It is not uncommon for AAPL to move 30 to 50 points during earnings.
Never forget that plain old naked puts are a great option. (excuse the pun) I never want to down-play the horse that got me here. They are still a viable way to do options. If doing naked puts leave lots of cushion and don’t worry about all this chatter regarding calendar and vertical spreads. They just complicate options and I am not sure they help with returns.
Nic Yes I have considered buying the longs 3 or 4 months out instead of say 6 to 8 and I have actually done so, I think most times it would be a good strategy but when you get these 15-20% drops then your doing a lot of work just to keep it at a small loss. I have an AAPL sep 390right now that I will probably have to roll soon to hopefully avoid a loss. I will say if I think the stock will runup in the next month or two then buying the calls 3 months out is ok , I have done ok that way also ,as Jerry said these spreads get complicated but if set up properly they will profit unless the market drops so I guess it depends on your outlook overall. As safe pointed out about rolling I have did that a lot and you have to or you will be assigned, a good rule is don't let the shorts delta get up to the long , close it out before then.
ShoNuff,
I actually did not trade SPX options for two weeks (waiting on our elected officials to do something with the debt level). Looking back, those two weeks would of been safe to trade SPX weeklys. When I did get back into "the game", my timing could not of been worse. I sold weekly puts on the morning of the day the SPX dropped 60 points (I had 245 points of cushion when I entered the trade and felt very safe with the trade...at that time). Again, that day, SPX dropped 60 points (a Thursday) and two days later (a Monday) it dropped another 80 points. When I sold those puts, I went as far out as I could go (at the time of the trade) and still get a .10 premium. I knew the markets were volatile and just wanted to pick up some small crumb action (little did I know just how volatile they would become). On that Monday close, I had 120 points of cushion with 4 trading days to go till those options expired. The markets dropped 60 points one day and two days later it drops another 80 points and I have 120 points of cushion with 4 days to go (more than half my cushion was wiped out...seemingly "just like that!"). Options that I sold for a measly .10 were (on that Monday's closing bell) going to cost me around 9.90 or more to buy them back. As luck would have it, the next day (a Tuesday) the markets were up and I was able to exit my positions for 2.15 (a loss of 2.05/contract) and I was very happy to do so. When I exited the trade (for a loss), I still had around 140 points of cushion with about 3.75 trading days to go. Had I stayed in the trade, I could of bought those puts back later that day for .30 (instead of the 2.15 premium I actually closed them for). Had I stayed the course till expiration, those puts would of expired worthless. My record trading the GIGO on SPX is 74 winners and 1 loser. That one loser (which really would of been a winner had I not bailed out early) wiped out the gains from many winners. Again, as luck would have it, because of the high volatility (high VIX), I made other trades that recovered 75% of my loss in three days and was able to recover all of my loss (from that one losing SPX trade) in just over a week’s worth of trading.
As Jim Cramer says "when conditions change, I change with them". There's also a saying "nothing good lasts forever". They both describe how I now feel about the SPX GIGO trade. It was fun while it lasted, but with the recent volatility in the markets (the markets can drop 140 points in 3 days), I no longer feel comfortable trading the GIGO on SPX, so I have pretty much "shelved that strategy" and no longer trade it.
To answer your question, if you have the stomach for it, YES, the strategy is still viable and works, but you have to be comfortable with a level of risk during those "tough times" that I'm just not comfortable with. If SPX was a stock or ETF that I could of taken possession of, I would of stayed in the trade. There is no WOF to be played on SPX, it's just a transfer of money from the loser's account to the winner's account. I'm now back to trading monthlies on stocks and ETFs. I'm having good success with that as I can play the WOF on anything put to me. They are for the most part boring trades (but boring is good)...I sleep very well at night. I'm also looking at selling monthly SPX puts (have not done so yet), but will eventually if conditions are right (good cushion and good premium).
Your question about volatility and more distant strikes, the answer to that is "absolutely". That is why I was able to make back the money I lost on that one SPX trade so quickly doing other SPX trades (trades done with good cushion and good premium...courtesy of the elevated VIX).
James, what I mean is buying a little deeper ITM for the money you save by going for a shorter period. You can then roll up and out for a very little or no debit every second month or so. If the stock is recovering slowly the delta will be the same.
What do you think? I just can't see an advantage with 6-8 months calls if I have similar time decay by rolling 3 month calls a couple of times.
Jerry, hearing you say that you're not sure diagonals helps with the return was a bit unexpected to say the least! :) I'm just getting ready to dip my toes.
I felt I was the skeptic in the group, but I think with the right expectations and approach they can be a good tool. I'm trying to get away from the trading point of view and more turn them into an investment method though.
If one can find a good way to maintain life in a semi long call by continuously rolling it, it will somewhat act as a substitute but with a monthly penalty of a couple of dollars in time decay and whatever the difference in delta. Let's say you miss out on half of what the underlying stock increases by having options instead of stocks. That is still pretty good leverage. So if AAPL goes up 100 in a year you would see 50 of that in your rolling options. However, right now the stock is at 370 and a deep ITM option with a 0.7 delta 4 months out costs about 50. This means you could buy 4 times the options and still only spend half the money. In other words, when AAPL goes up 100 your options goes up 200. In addition to that you should be able to generate on average 2 bucks a week selling weekly calls against them for an additional 100 points profit. While AAPL goes up 100 you would basically see a 300 increase.
Now this obviously only works if AAPL goes up 100 points and you have to keep chugging along during drops, but this is no different from actually owning the stock. You obviously have to pick a stock you really believe in, and quite frankly, I wouldn't be surprised if AAPL hits 600 before slowing down.
What do you guys think, am I completely loosing it?
The level of the discussion on this blog is beyond any other I've seen so far.
I think the world economy could stop this party anytime by going into a new recession. The mortgage numbers were bleak and not even Apple would be immune to an SPX around 8-900, even though I agree that they would be probably be hit much less than others with their low P/E. With China largely unsaturated and potential new products they would easily go to 600 in an up market. The question is if we will have it.
Nic you have raised a very good point I must say I have not looked as deeply into this as you have. I don't have a lot of capital to work with so with AAPL i have only traded 1 contract until i feel more comfortable with the trade.Most of the "gurus" I have read go out longer with diagonals, and also I have yet to find anyone but here who do these selling the weeklys so we are somewhat in uncharted territory. I think either 3 mon out or 6 will work normally but we are not in a normal market so I want to see things stabilize some if that is possible.
Wow!!! Breaking news, Steve Jobs resigning at Apple....
http://finance.yahoo.com/news/Steve-Jobs-Resigns-as-CEO-of-bw-19285464.html?x=0&.v=1
I suspect Apple will get Hammered Tomorrow, maybe i can get apple at 250 :)
Although there may be a tough period, I think this will be a buying opportunity. If we've had a normal market I would have backed up the truck once this calms down.
@DaveG
Thanks for your thorough response, Glad to see you survived quite well, you must have nerves of steel especially when your SPX puts were 9.90.
I have been mostly in cash, I did sell a few IWM puts last week that have been good but I'm still uncertain about the present market. Most of the economic data has been negative lately even though the major sell off was bit overboard. A lot of the technical guys see this as bottom but who know? Housing certainly doesn't look good but companies are still making profits and sitting on wads of cash so all is not bad.
Gosh.. right after I have sold AAPL Sept 320/315 put, Steve Jobs resigned!
Should I hold on to this position?.. It's a tough decision to make..
Not buying more AAPL long dated calls yet. Have to wait till after Friday. Could bounce back a wee bit tomorrow. (AH down 19) Looks like my sold 390 calls will expire worthless. Still holding Jan 400 calls. Plan to keep selling against them for the time being.
Shorted both gold and silver for a nice gain this week....got out late today though. Hit and run. I will be watching AGQ and the 150 level. Possible buy opportunity approaching.....long dated calls. I don't think we are out of the woods with the general market selloff. Banks extremely sick...BAC, C.
Be careful with selling put spreads.
Ying, your are in a tough spot but still have cushion. As long as AAPL stays above 330.....I'd hold for now. If your gut tells you to run....then by all means...run. Curious as to why you sold a put spread with a long date...Sept?
later, RK
run on banks? Looks like every one hundred years or so.....take a look.
http://en.wikipedia.org/wiki/Run_on_the_bank
If we see another leg down, this could get VERY interesting.
haha...now that's funny. my word verification is parynors. LOL
I have 2 naked puts in AAPL 350 that expire tomorrow (Friday), pre-mkt is now 357 (6 am). I did not lose sleep over Job's announcement, but this kind of thing shows me how you can be caught overnight, without your pants
@Paul
Did you get it on Monday? Then you are in good profit??
Day traded SINA & AMZN from a few minutes to a couple hours last few days very conservatively with tight stop loss. Up account 4%. Zero faith in market, trade what I see only.
AAPL down only 8 points pre market. Not bad for the news. I suspect it will decline slowly almost all day.
SPX put spread - 1030 / 1025 seems to be holding. I think it will expire worthless.
I suspect the market will drop on Friday by a heavy amount. There is an announcement and even if it is a good one it won't be enough for investors.
I hope all you guys are doing well on your positions. All of you with your crazy diagonal plays, I don't get any of it haha. I will just stick with the call/put spreads. I already have to much confusion in my life :)
But then again im probably missing out on some good return.
Good return .. sanity .. good return .. sanity .. soooooo hard to decide!
@Hannah
got it on Wednesday (yesterday). I'm in the red zone but AAPL is now at 367 (pre-mkt). If it opens in this price range (and stays there) I should be okay.
I'm glad I bought a Call on BAC at the end of yesterday's session. I'm getting some decent results buying calls. It the option drops 20% I sell. Once in the profit zone, I aim at 100% but will get out with 30 % in the blue. It's easy, objective, and no losses above 100%.
Good job Paul on BAC :)
Well, I sold the 1115/1120 spx ,leaving me 40 pts cushion and 6 1/2 hrs time. More of a gamble than anything but hopefully some optimism in the speech in the morning.I regretted it right away but maybe I can dodge one here. Good luck everyone tomorrow on your closings. Charlie
Can anyone make a suggestion here?
I'm still holding the AAPL 375/370 put spread, expiring tomorrow. I rolled this from a couple weeks ago when it was over 400 and didn't roll down, only out.
The plan is to see how the open goes tomorrow and if it's not looking good I will roll or bail out. If it's up slightly and looks like it might peg the 375 strike, should I sit and hope it closes above 375?
If it closes just in the money, at 374.90, will I get put 100 shares and get a call for $37k? Or just the .10 difference?
Thanks!
Hi Josh, if in the money, any amount, (below 375) you will get put to and have to buy the stock from the contract for 375. Some brokerages don't exercise below .05ITM. But you need to know your brokerage guidelines. When I am in that fix I look out to the next week if offered and see how far down I can roll and still either make money or at least break even. TradeKing does offer an easy way of rolling a spread. It is called a free form 4 leg... sounds confusing but it is very intuitive.
You can usually roll out to the next week or month and get some cushion. If the stock is near your strike with 15 min to go i usually roll and call it a day.
A lot of the profit window depends on Monday open. As a general rule the stock could be at 374.90 and you will not get put to. (general rule being the buzz words) I have 95 of the 345/350 so I am also watching tomorrows ending.
Regarding the 37K. It will be done by the brokerage, the stock will be bought and sold and your net loss or gain will be posted.
Good luck
Did some plain old fashion NP's today;
When Visa found support today after testing its 20, 50 & 13ema.
STO Visa 60 9/17/11 for .26; 29+% cushion; 3%+ ROI.
STO Visa 62.50 9/17/11 for .35 ; 26% cush 3.6% ROI.
22 DTE
@ Fulgore. Congrats, another week of collecting SPX crumbs. Have a good weekend
rhm
@rhmoptions, gratz to you too if you were in, I didn't see a post.
I will look to SPX again next week. VIX is down to 35, still a bit high but I can deal with it. I will keep an eye on the SPX and any global news next week. I may get in either Tues or Wed as with this week.
How did everyones plays, play out this week?
@fulgore
Yes i was in at 975/950 monday (post #3 at the top of this set of posts). Ill look to od it all again Monday
Cheers
AAPL calls looked good by Friday. Couldn't find anything I liked to sell against them 'cause after 'the announcement' the premiums looked weak all week. Just left 'em naked and they did amazing. Guess I just have to believe in a a 'Jobless" Apple.
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