chinacat
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AAPL Long since 2006
Posts: 4,426
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Post by chinacat on Aug 1, 2020 8:26:20 GMT -8
Largest weekly gain since...well, I haven’t found a bigger one yet , and considering the basis was already near a previous ATH, I doubt there is one; percentage gain also the largest ever, although they have only been tracked here for the last few years. If anyone wants to spend the time, I wouldn’t mind being corrected. Who wants to guess what the first post-split price will be? With a whole month to go, could it possibly be $125? As Stephen Colbert would say, Meanwhile... AppleInsider has Apple buys startup that turns smartphones into mobile payments terminals. When the iPhone came out, who could have imagined what a multi-purpose tool it would become (other than Steve and the rest of Apple management)? Also, NHL players stick iPhone 11 Pro to skates with tape in new ad spot in case you ever wanted to see what a puck’s view of the ice is like.
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chinacat
Moderator
AAPL Long since 2006
Posts: 4,426
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Post by chinacat on Aug 1, 2020 8:37:31 GMT -8
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chinacat
Moderator
AAPL Long since 2006
Posts: 4,426
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Post by chinacat on Aug 1, 2020 14:23:46 GMT -8
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JDSoCal
Member
Aspiring oligarch
Posts: 4,182
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Post by JDSoCal on Aug 1, 2020 15:51:03 GMT -8
LoveMyiPad used to call shorts "rocket fuel." Of course this can't happen until the stock starts to go up. So it's a combination of factors that cause the cascade. Of course there were shorts set up before earnings. Only question is how broad and deep. I think schadenfreude over someone losing money is bad Karma, so I won't laugh at them, even if they deserve it. I'll just say, "y'all come back now, you hear?" And congrats to Grandpa PED.
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4aapl
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Post by 4aapl on Aug 1, 2020 16:05:25 GMT -8
Off to the beach for dinner and outside games, but.... Anytime the stock moves much, near the money options that expire soon move a lot. Let's say the stock is at 425. Maybe I have some shares that I want to sell, or don't mind selling. I decide to try my luck at juicing a few more bucks from them, so maybe I sell a 430 that expires this Friday. And maybe I get around 1% for it, so $4. If the stock closes below 430, I keep the $4, and keep my stock. If it closes above 430, I still keep the $4, but also sell the stock at 430. I get a net $434 for it (strike plus premium). So if the stock closes at $431, I'm actually ahead. Instead, if the stock makes a big move, like $40, that's a bit different. That puts the stock at $465, or 35 above the strike. That made someone 35 from $4, so a 775% profit. That doesn't happen too much, and is different than a short squeeze. But that's just a primer. (edit) The other side of the trade looks bad in comparison to if they had held the stock, but they made $9 more than they would have if they just sold at $425, so a little better than 2% extra, in a week. If someone made 2% some weeks, and 1% the other weeks, they wouldn't be doing too bad on an annualized basis, as long as they didn't sell out at a much lower price than they bought the underlying.
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Post by Red Shirted Ensign on Aug 1, 2020 16:38:19 GMT -8
The delta quadrant is secure. When I left Apple was selling around $150/sh. I understand ( time travel being a paradox) that this will soon be the case again..
Remarkable.
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4aapl
Moderator
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Post by 4aapl on Aug 1, 2020 20:50:01 GMT -8
On a marketwatch article about AAPL's split, and what people should know about using the spit to invest, I wrote:
"A split shouldn't matter. But, companies tend to do it when there is positive momentum. AAPL is still underpriced compared to many/all of it's competitors when looking at various metrics, the easiest being P/E. There's still room to run, but no one knows how much the stock will gain. That said, I bought my first shares 22 years ago, and this setup (strong sales due to people upgrading their computers, strong pipeline with extra incentives to upgrade on iPhones, strong user base that values Apple's better products giving higher user satisfaction, willingness to pay for higher quality, and stickiness of user base, strong apps user base, strong and growing user base on wearables (watch and AirPods) and in other subscriptions) is one of the best. Steve and Tim have both said at times that the pipeline looks the best yet. But to me this looks the best ever."
With that mindset, while I don't see warp speed to $150 post split, $125 seems plausible before the iPhone announcement if certain things happen, which would beget $150 within a year with a 20% annualized return. To me that's the yellow brick road path, but it's not as outlandish as I thought just a week ago.
"Dream a little dream for me". But watch out for the frothy top, as it's hard to keep a level head when in the midst of it.
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chinacat
Moderator
AAPL Long since 2006
Posts: 4,426
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Post by chinacat on Aug 2, 2020 9:04:53 GMT -8
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JDSoCal
Member
Aspiring oligarch
Posts: 4,182
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Post by JDSoCal on Aug 2, 2020 9:24:11 GMT -8
For those new to the board, I've been long AAPL since the early 90's. Since then, Apple has split three times for a total of 28. that would mean my cost-basis AAPL price is 11,900. Does anyone think that AAPL would be $11,900 per share had there been no splits? If you go back to 1987, you add another 2X, so the real price of AAPL would be 23,800 since its IPO without splits. Does anyone believe this could have happened absent splits?
Some might point to BRK, but Berkshire Hathaway is an investment fund that is an aggregate of other companies and investments. And of course Buffett offered the smaller B class shares at like 1/1000 the price of the A's.
Any article I see about the split that doesn't include the word "psychology" is suspect. Big stock numbers scare investors. And even the financial media would be saying "OMG AAPL is a 5 figure stock, overpriced!" even though its PE is at the low end of its sector - assuming Apple isn't its own sector. Finally at parity with Google's PE though, which is long overdue. IMO Google is in existential trouble for reasons I won't go into on an Apple board. But let's just say Apple has a lot to do with it.
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Post by Luckychoices on Aug 2, 2020 11:45:30 GMT -8
My wife and I virtually never vary from just holding AAPL because I've proven to myself that we do better when I don't try to anticipate what the market or AAPL is going to do. In other words, I'm not a risk taker...other than being only invested in AAPL, of course. But how is that risky? 😊 Any way, back in May, I decided to *not* have our May AAPL dividends auto-reinvested because I was 90% certain that the ongoing pandemic would cause the market in general to do poorly until it was eliminated. Well, I was obviously mistaken...badly mistaken. I did an update to the thread, "Sometimes it helps to have all your eggs in one basket" for any who are interested in how mistaken I was and the consequences of my serious misjudgment. Cheers to the AAPL Longs!! Be careful out there!! 😂
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,099
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Post by Dave on Aug 2, 2020 15:40:12 GMT -8
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chinacat
Moderator
AAPL Long since 2006
Posts: 4,426
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Post by chinacat on Aug 2, 2020 18:34:43 GMT -8
Should be interesting to see what happens with AAPL this week, and indeed for the whole month. On the one hand there there will be lots of excitement about the 3Q numbers, but on the other hand a desire to hold the price down in order to buy the split shares more cheaply, betting on a run after the split. From what I read, there is no typical pattern. So what are AFBers expecting and/or hoping for? We are not expecting to buy or sell shares, so as long as the price goes up, we don’t care when.
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mark
fire starter
Posts: 1,552
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Post by mark on Aug 3, 2020 6:01:07 GMT -8
If someone made 2% some weeks, and 1% the other weeks, they wouldn't be doing too bad on an annualized basis, as long as they didn't sell out at a much lower price than they bought the underlying. But this clearly isn't true! Because once they made the 1-2% the week the stock was called from them, they don't own the stock anymore, and they can't play this game ("selling covered calls") anymore. So annualized might be something like weeks of 1%, 2%, 1%, 1%, 1%, 1%, 2%, 1%, 1% (stock called), 0, 0, 0, 0, 0, etc... And, by the way, this is the answer that I regularly give to people who claim that the premium they collect on covered calls is "free money". First I tell them - "why would those call buyers be regularly giving away free money? Makes no economic sense!" and then I show this very example.
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4aapl
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Post by 4aapl on Aug 3, 2020 7:44:17 GMT -8
If someone made 2% some weeks, and 1% the other weeks, they wouldn't be doing too bad on an annualized basis, as long as they didn't sell out at a much lower price than they bought the underlying. But this clearly isn't true! Because once they made the 1-2% the week the stock was called from them, they don't own the stock anymore, and they can't play this game ("selling covered calls") anymore. So annualized might be something like weeks of 1%, 2%, 1%, 1%, 1%, 1%, 2%, 1%, 1% (stock called), 0, 0, 0, 0, 0, etc... And, by the way, this is the answer that I regularly give to people who claim that the premium they collect on covered calls is "free money". First I tell them - "why would those call buyers be regularly giving away free money? Makes no economic sense!" and then I show this very example. With the money given back from the sell, you would buy more shares. In theory this works best for a stock that's somewhat stable. You wouldn't want to be buying at a high, and the math seems strange to write underwater covered calls when the stock is down. This is the problem I faced when I picked up a few shares of BP years ago and was writing covered calls against it, and it went down. If you bought it at 45, do you really want to write covered calls at 32.5 or 35. OTOH, it makes a lot of sense in a more cyclical stock, or one that you think is near its relative high. Write them out a little further, and if they take away the stock, you made a bit extra. The downside there really is that if you actually wanted to sell around there, and they didn't get taken away, you'd still have the stock. But, less volatile more boring stocks have lower option premiums. Take an oil giant, or something like the S&P, and they are pricing in tiny annual moves. That can be great if you can capture it bullishly, but not the right thing for covered calls. OTOH, since AAPL has good sized premiums, there are probably ones out there that are even higher. Take something with a lot of volatility, and some big supporters/fan boys, but that you don't mind investing in, and you might have something. I'm thinking on the lines of AMZN/NFLX/TSLA, but maybe something like Moderna too. The key would be finding something that either wasn't completely overpriced, or a small enough position that you didn't mind. Anyways, it looks like AAPL is giving us plenty of juice without worrying about it too much. But yea, if not needing to sell though wanting to sell some, while not being on the ready for a couple minute spike, one way to get a little more is to write some calls at a level you'd be happy at. Go in small chunks. OTOH, those people making the 800% were pretty risky, betting a few bucks that there would be a big swing. And it paid off....this time.
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mark
fire starter
Posts: 1,552
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Post by mark on Aug 4, 2020 11:50:03 GMT -8
But this clearly isn't true! Because once they made the 1-2% the week the stock was called from them, they don't own the stock anymore, and they can't play this game ("selling covered calls") anymore. So annualized might be something like weeks of 1%, 2%, 1%, 1%, 1%, 1%, 2%, 1%, 1% (stock called), 0, 0, 0, 0, 0, etc... And, by the way, this is the answer that I regularly give to people who claim that the premium they collect on covered calls is "free money". First I tell them - "why would those call buyers be regularly giving away free money? Makes no economic sense!" and then I show this very example. With the money given back from the sell, you would buy more shares. Ah, you are describing a different investment technique - selling uncovered calls! If you are just buying the stock back each time it gets called, then that is effectively what you are doing. This is another very important point ... when the stock is rising (and most of the time they are), you can only buy back fewer shares each round of being assigned a call. The other thing you will notice in this case is that the price you are getting for your calls is low ... sometimes even too low to make it worth your while. It's not just you (the option seller) who recognizes the low volatility in a cyclical stock near its high (or low for that matter) range, it's also the option buyer who recognizes that, and bids accordingly. Yep, as I said, often not even worth the bother to do the trade. The point is that selling calls is NOT free money. The value received is equal to the value given ... that's how a free market works.
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4aapl
Moderator
Posts: 3,632
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Post by 4aapl on Aug 4, 2020 12:31:12 GMT -8
The point is that selling calls is NOT free money. The value received is equal to the value given ... that's how a free market works. Nothing is ever free, if you start including opportunity costs and trade-offs. But, there are times where one person values something differently than you do, and you can use that to your advantage. It might be that neither side is right nor wrong, but that their risk/reward goals are different. If you see the stock going up 20% annualized, but some big players are only looking for 10 or 12%, they might write covered calls, and you might buy calls. Different goals for different risk/reward groups. Right now, if I can write covered calls 1.1-2.1 years out, at a total return of 20% annualized plus another 10%, while taking in a premium around $20/share, I have a hard time passing that up. Sure, there's a chance AAPL will pull off 25 or 30% annualized rate, or go insane as it has over the past 1-1.5 years, but at some point it's just wishing for a bigger pot at the end of the rainbow. But, different people have different goals, and different ideas. If I had fewer shares, or wasn't super concentrated, maybe I'd write cash or margin covered puts instead. Or if I felt Apple was in a different cycle of it's life, maybe I'd hold out for 40% or 50%, while getting a much smaller premium.
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