chinacat
Moderator
AAPL Long since 2006
Posts: 4,426
|
Post by chinacat on Apr 21, 2018 6:59:19 GMT -8
|
|
ono
Member
compensation
Posts: 537
|
Post by ono on Apr 21, 2018 17:11:37 GMT -8
Thanks for opening. I'm wondering about some LEAPs. It may take a while for the capital return and services to get factored in. Last time I did LEAPs I probably lost near as much as the success of the first time. It made me realize they're more complicated than I thought.
Thoughts?
|
|
chinacat
Moderator
AAPL Long since 2006
Posts: 4,426
|
Post by chinacat on Apr 22, 2018 7:40:22 GMT -8
Following up on the story about Tim framing the Apple business model in a new light for Wall Street, PED has Merrill Lynch: Apple Services have plenty of room to grow. The bit that I found most interesting is "Approximately 85% of app store users download at least one app a month." I can't remember the last time I downloaded an app; I suspect the difference is that for many people the iPhone IS their computer; I have an iPhone, an iPad and an iMac, so my use of iPhone apps is relatively light, especially now that I am retired (Thank you, AAPL!) and around home much more often.
|
|
bud777
fire starter
Posts: 1,352
|
Post by bud777 on Apr 22, 2018 9:22:59 GMT -8
Thanks for opening. I'm wondering about some LEAPs. It may take a while for the capital return and services to get factored in. Last time I did LEAPs I probably lost near as much as the success of the first time. It made me realize they're more complicated than I thought. Thoughts? I assume you are talking about buying leaps. I don't have experience with that, but I have been selling LEAPS for a couple of years. My reasoning is a little different from most. I am in my 70's and have enough money to be financially secure for the rest of my life. I asked myself if there is a single life decision I would make differently if I had another million or so. I could not think of one. My daughter is a tenured professor at an ivy league university and my son is married to a successful lawyer. They will each inherit a couple of million, so I don't see a need to accumulate more wealth. Given these circumstances, I feel comfortable selling LEAPS that cap my potential upside. I sell the LEAPS two years out when they become available, usually in October. Each year I buy back the previous years LEAPS and sell new ones. The spread is about 6 points or $600 per 100 shares. This means that I am always short LEAPS that have at least a year of time value left. The chances of being called away in this case are extremely small. Since Apple is appreciating, I am buying the LEAPS back at a higher price than I sold them which generates a short term capital loss. This loss offsets the revenue received from the sale of the new LEAPS, making the gain tax free. This only works for me because I do not mind losing the potential gain as Apple rises past the strike price of the LEAPS. If you are out to just maximize your wealth, this would not make sense. You are better off just holding the stock. One benefit to this strategy, especially if you have a hight percentage of your portfolio in Apple, is that the LEAPS act as a hedge against the downside. In the past two session, what would have been a $156,000 drop in portfolio value was only about $21,000. As I said, this is not for everyone. In my case, the additional cash flow now is more valuable than handing a larger amount to my heirs.
|
|
ono
Member
compensation
Posts: 537
|
Post by ono on Apr 23, 2018 4:54:30 GMT -8
Thank you! I'll have to consider.
|
|