Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on Jul 20, 2016 2:12:07 GMT -8
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Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on Jul 20, 2016 3:09:40 GMT -8
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bud777
fire starter
Posts: 1,353
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Post by bud777 on Jul 20, 2016 11:23:46 GMT -8
WOW! We are a week away from earnings, VXAPL is 24. We have had only two posts. Institutional ownership is under 60%. It is so quiet you can hear an option drop. Seriously, from a psychological point of view, this is an extreme and extremes are where we make money. Does anyone know how to exploit this? It would make sense if Apple were not the most profitable company in history, but this is truly amazing to me. I am thinking about one idea that might be worth considering. I would appreciate any opinions. Lets say that you own 5000 shares and that you are a conservative investor. Your basis in the shares gives you a price per share of $50. So you sell Jan 18 puts with a strike price of 85. Currently the ask is $7, so you pocket $35,000. At the same time you set a limit order to sell all shares at $87. The sale of the stock gives you enough cash to cover the assignment of the puts. If the stock hits 87 but not 85 and then goes back up, you can get back in at 94 with no harm done. This seems to me to be as safe as a covered call, just going the other way. If Apple takes off and goes up, you can always buy the puts back at a reduced price to get out of the position or just let it expire.
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Post by rickag on Jul 20, 2016 12:26:21 GMT -8
WOW! We are a week away from earnings, VXAPL is 24. We have had only two posts. Institutional ownership is under 60%. It is so quiet you can hear an option drop. Seriously, from a psychological point of view, this is an extreme and extremes are where we make money. Does anyone know how to exploit this? It would make sense if Apple were not the most profitable company in history, but this is truly amazing to me. I am thinking about one idea that might be worth considering. I would appreciate any opinions. Lets say that you own 5000 shares and that you are a conservative investor. Your basis in the shares gives you a price per share of $50. So you sell Jan 18 puts with a strike price of 85. Currently the ask is $7, so you pocket $35,000. At the same time you set a limit order to sell all shares at $87. The sale of the stock gives you enough cash to cover the assignment of the puts. If the stock hits 87 but not 85 and then goes back up, you can get back in at 94 with no harm done. This seems to me to be as safe as a covered call, just going the other way. If Apple takes off and goes up, you can always buy the puts back at a reduced price to get out of the position or just let it expire. Sounds good to me, but will brokerage houses let you do this without having actual case to cover?
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Ted
fire starter
Posts: 882
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Post by Ted on Jul 20, 2016 12:32:46 GMT -8
Hello 99.96!! Zzzzz
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Post by rickag on Jul 20, 2016 13:18:09 GMT -8
WOW! We are a week away from earnings, VXAPL is 24. We have had only two posts. Institutional ownership is under 60%. It is so quiet you can hear an option drop. Seriously, from a psychological point of view, this is an extreme and extremes are where we make money. Does anyone know how to exploit this? It would make sense if Apple were not the most profitable company in history, but this is truly amazing to me. I am thinking about one idea that might be worth considering. I would appreciate any opinions. Lets say that you own 5000 shares and that you are a conservative investor. Your basis in the shares gives you a price per share of $50. So you sell Jan 18 puts with a strike price of 85. Currently the ask is $7, so you pocket $35,000. At the same time you set a limit order to sell all shares at $87. The sale of the stock gives you enough cash to cover the assignment of the puts. If the stock hits 87 but not 85 and then goes back up, you can get back in at 94 with no harm done. This seems to me to be as safe as a covered call, just going the other way. If Apple takes off and goes up, you can always buy the puts back at a reduced price to get out of the position or just let it expire. Just thought I would add that I have been noodling around thinking what I may do. I have cash set aside in an IRA for the inevitable Stock Market crash people keep yammering about. I was considering putting this cash in a brokerage account and selling puts at a strike price between $80 - $85. With Apple's dividend this seems like a very good price that I don't believe will happen, but I also wouldn't be surprised. Your scenario would be more profitable, since I am a long term holder and don't foresee selling anytime soon. Plus the premium could be used to buy Jan 18 $110s Surely AAPL will be above 117.63 by Jan 18.... right... since we know AAPL would never linger at the same share price for 2 years would it........oh wait........ er....... um.... maybe not buy Jan18 calls after all. Could buy high quality dividend stocks though.
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Post by incorrigible on Jul 20, 2016 13:44:51 GMT -8
Big beat by Qualcomm. May bode well for Apple. Device sales which were 2.6B over top end guidance. Not all Apple though of course.
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bud777
fire starter
Posts: 1,353
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Post by bud777 on Jul 20, 2016 14:40:09 GMT -8
WOW! We are a week away from earnings, VXAPL is 24. We have had only two posts. Institutional ownership is under 60%. It is so quiet you can hear an option drop. Seriously, from a psychological point of view, this is an extreme and extremes are where we make money. Does anyone know how to exploit this? It would make sense if Apple were not the most profitable company in history, but this is truly amazing to me. I am thinking about one idea that might be worth considering. I would appreciate any opinions. Lets say that you own 5000 shares and that you are a conservative investor. Your basis in the shares gives you a price per share of $50. So you sell Jan 18 puts with a strike price of 85. Currently the ask is $7, so you pocket $35,000. At the same time you set a limit order to sell all shares at $87. The sale of the stock gives you enough cash to cover the assignment of the puts. If the stock hits 87 but not 85 and then goes back up, you can get back in at 94 with no harm done. This seems to me to be as safe as a covered call, just going the other way. If Apple takes off and goes up, you can always buy the puts back at a reduced price to get out of the position or just let it expire. Just thought I would add that I have been noodling around thinking what I may do. I have cash set aside in an IRA for the inevitable Stock Market crash people keep yammering about. I was considering putting this cash in a brokerage account and selling puts at a strike price between $80 - $85. With Apple's dividend this seems like a very good price that I don't believe will happen, but I also wouldn't be surprised. Your scenario would be more profitable, since I am a long term holder and don't foresee selling anytime soon. Plus the premium could be used to buy Jan 18 $110s Surely AAPL will be above 117.63 by Jan 18.... right... since we know AAPL would never linger at the same share price for 2 years would it........oh wait........ er....... um.... maybe not buy Jan18 calls after all. Could buy high quality dividend stocks though. I have an aversion to buying options unless it is to close out a position. I equate selling options to selling insurance, but buying options seems to me like just gambling and I know the house is going to win. On the other hand, I do intend to sell calls in October before earnings. The Jan 19 calls will be available then and volatility should be high right before earnings. My hope is that the combination of longer time and higher volatility will result in a higher price for the options. To take the put strategy to another level, one could not only sell puts at 85, but also sell puts at 75 and 65. each time you would sell 50 contracts to cover your 5000 shares. If the price fell, the scenario would be that you would sell at 87, buy back at 85 when the puts were assigned, then sell at 77 if it drops further and buy back at 75, etc. doing this would increase your profit from the puts to 5000*(7 + 4.26 + 2.50) or $68,800. The only problem I see with this is the case where the stock drops to 60 and none of your puts have been assigned, then all are assigned at once. you would be forced to buy 15,000 shares at 60. You would have sold 5000 shares at 87, so you would have $500,000 from the options and the sale of the stock, but be on the hook to buy $900,000 worth of Apple shares. This risk could be covered by using margin or other investments, I suppose. Just something to think about until earnings. OH, and you would need level 4 approval. Could not do it in an IRA.
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JDSoCal
Member
Aspiring oligarch
Posts: 4,186
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Post by JDSoCal on Jul 20, 2016 15:51:44 GMT -8
Am I the only one getting "Hmm, the page you're looking for can't be found." at Apple Investor Relations? That's disturbing.
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Post by mace on Jul 20, 2016 15:57:57 GMT -8
iCloud screwed. Can't sync my calendar. Eddie Cue or his VP should listen to the swan song.
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Post by CdnPhoto on Jul 20, 2016 18:04:13 GMT -8
Am I the only one getting "Hmm, the page you're looking for can't be found." at Apple Investor Relations? That's disturbing. Working fine for me right now.
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Post by nagrani on Jul 20, 2016 20:37:07 GMT -8
iCloud screwed. Can't sync my calendar. Eddie Cue or his VP should listen to the swan song. Cry me a river
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Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on Jul 21, 2016 2:04:49 GMT -8
Am I the only one getting "Hmm, the page you're looking for can't be found." at Apple Investor Relations? That's disturbing. Perhaps they were doing maintenance. I get the page fine this morning.
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Post by Odd-Lot Richard on Jul 21, 2016 20:01:07 GMT -8
I am thinking about one idea that might be worth considering. I would appreciate any opinions. Lets say that you own 5000 shares and that you are a conservative investor. Your basis in the shares gives you a price per share of $50. So you sell Jan 18 puts with a strike price of 85. Currently the ask is $7, so you pocket $35,000. At the same time you set a limit order to sell all shares at $87. The sale of the stock gives you enough cash to cover the assignment of the puts. If the stock hits 87 but not 85 and then goes back up, you can get back in at 94 with no harm done. This seems to me to be as safe as a covered call, just going the other way. If Apple takes off and goes up, you can always buy the puts back at a reduced price to get out of the position or just let it expire. Limit orders turn to market orders if it passes the price, or was that stop loss?—if AAPL gaps down to $80, your limit order converts to a market order, you sell at $80 AND you have a chance to get assigned the shorted puts. January gives you some leeway but on a gap that far down I can see exercising puts being a good strategic play.
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bud777
fire starter
Posts: 1,353
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Post by bud777 on Jul 21, 2016 21:23:47 GMT -8
I am thinking about one idea that might be worth considering. I would appreciate any opinions. Lets say that you own 5000 shares and that you are a conservative investor. Your basis in the shares gives you a price per share of $50. So you sell Jan 18 puts with a strike price of 85. Currently the ask is $7, so you pocket $35,000. At the same time you set a limit order to sell all shares at $87. The sale of the stock gives you enough cash to cover the assignment of the puts. If the stock hits 87 but not 85 and then goes back up, you can get back in at 94 with no harm done. This seems to me to be as safe as a covered call, just going the other way. If Apple takes off and goes up, you can always buy the puts back at a reduced price to get out of the position or just let it expire. Limit orders turn to market orders if it passes the price, or was that stop loss?—if AAPL gaps down to $80, your limit order converts to a market order, you sell at $80 AND you have a chance to get assigned the shorted puts. January gives you some leeway but on a gap that far down I can see exercising puts being a good strategic play. I think I used the wrong term. I was thinking of a stop loss order. The idea is to convert the stock to cash so you have it when you are assigned.
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