Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,335
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Post by Dave on May 20, 2022 1:46:07 GMT -8
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,335
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Post by Dave on May 20, 2022 1:56:58 GMT -8
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Post by artman1033 on May 20, 2022 2:16:14 GMT -8
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,335
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Post by Dave on May 20, 2022 5:44:56 GMT -8
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Post by Lstream on May 20, 2022 5:56:21 GMT -8
It is thinking like this that has me avoiding material selling during these downturns.
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mark
fire starter
Posts: 1,631
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Post by mark on May 20, 2022 7:04:29 GMT -8
It's Friday and options expiry day ... maybe today will be the capitulation day that everyone is waiting for?
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Post by elmar on May 20, 2022 9:21:32 GMT -8
It's Friday and options expiry day ... maybe today will be the capitulation day that everyone is waiting for? I hope so. I have still some dry powder to invest. I have bought some on the way down and would now prefer to buy on the way up😉
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JDSoCal
Member
Aspiring oligarch
Posts: 4,241
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Post by JDSoCal on May 20, 2022 9:52:59 GMT -8
Where is the link to sign up for capitulation?
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4aapl
Moderator
Posts: 3,867
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Post by 4aapl on May 20, 2022 10:04:23 GMT -8
I have no certainty on the timing, but at some point I might be considering some options, either a bull call spread or straight calls with the option of changing them into a BCS in the future.
We see Mark's 90-120 BCS for mid-'23. What else are people thinking about?
Normally I aim for something right about at the money, but this time it would probably be something out of the money with a fairly obtainable breakeven at expiration point, and a potential of a 200% gain on something not too crazy. Like $180+ within a year and a half.
300% gain would be even better, but I'm not seeing it unless just buying options now, and selling the other side in the future at a hopefully higher underlying price.
With volatility high, there's no need to buy today, and I'm not ready for it anyways. But I could see making a purchase within a week. Like this whole cycle, IMO it would be a whole different ballgame without the Ukraine/Russia war, if this were raining just inflation and interest rates. So that does give more unknowns, especially on timeframes.
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Post by duckpins on May 20, 2022 10:08:13 GMT -8
It's Friday and options expiry day ... maybe today will be the capitulation day that everyone is waiting for?
Worst consecutive weekly loosing streak for DOW since 1923. There are more hedge funds now. 1000's more. So they are all highly leveraged. As they all try to decrease leverage at the same time the pressure on the market is downward. They are worried the interest rates are rising, thus it costs more to leverage. Inflation is taking away consumer money as well as high energy prices. Recession. War. Covid. Not sure market has digested the full fury of this negativity quite yet. Hope I am wrong.
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Post by kpas1 on May 20, 2022 10:17:24 GMT -8
Interesting exercise in re-centering my options portfolio down about $25, from around $160 to $135. When you're delta neutral with a slight upside bias, you have to scramble a bit when the bear strikes.
Saddest part is that the long call spreads that I have legged into for cheap or free may now expire worthless. But the point of entering at a low cost basis is that you're willing to let them wither away if it comes to that.
It has helped to keep things under control to have some downside insurance in the form of bear put spreads (BePS). Ever since Feb with the combined threats of Ukraine war and Fed/inflation, I have held and rolled these positions. It has proven to level out the bumps on this big slide.
Bottom line is I have only taken a small hit, and once AAPL stabilizes I can easily recover to my previous highs. As before, selling premium is lucrative when the IV is high, which has certainly been the case for AAPL lately. Starting to nibble at some long legs to set up more free BuCS for the coming upward trend (just what 4aapl was suggesting as I was writing this).
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Post by socal Film Composer on May 20, 2022 10:49:58 GMT -8
Weeks like those we've had are why my LEAPs in apple are always super conservative - i.e. deep in the money - currently I have Jan $85s and $90s - hoping that is still conservative by the time this mess is over - hang in there folks!
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mark
fire starter
Posts: 1,631
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Post by mark on May 20, 2022 10:52:24 GMT -8
Where is the link to sign up for capitulation? Most brokers have a button for it ... it is usually labeled "SELL". 🤣
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mark
fire starter
Posts: 1,631
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Post by mark on May 20, 2022 11:14:46 GMT -8
I have no certainty on the timing, but at some point I might be considering some options, either a bull call spread or straight calls with the option of changing them into a BCS in the future. We see Mark's 90-120 BCS for mid-'23. What else are people thinking about? Normally I aim for something right about at the money, but this time it would probably be something out of the money with a fairly obtainable breakeven at expiration point, and a potential of a 200% gain on something not too crazy. Like $180+ within a year and a half. 300% gain would be even better, but I'm not seeing it unless just buying options now, and selling the other side in the future at a hopefully higher underlying price. With volatility high, there's no need to buy today, and I'm not ready for it anyways. But I could see making a purchase within a week. Like this whole cycle, IMO it would be a whole different ballgame without the Ukraine/Russia war, if this were raining just inflation and interest rates. So that does give more unknowns, especially on timeframes. I also have June '23 140-160 BCS ... unfortunately entered into that trade early this year near the ATH (if you recall, back then I lamented here that I had "forgotten" to enter any BCS trades, and that my last one had ended a few days earlier when Jan options expired). I nearly bought back the 160 leg yesterday at $11 and then go bare on the 140. While it may be a good idea, it is functionally equivalent to buying a 160 call at $11, that makes breakeven at $171, and that is not necessarily a sure thing (it'll all depend on when the recession starts, how deep it is, and how long it lasts). Therefore I didn't do it. I chose to NOT add $11 of capital to that trade, and instead let it continue as is. Right now sitting on a loss in that trade, of course. And if government+fed+market+etc delays the recession to 1Q23/2Q23, then it is quite likely that this BCS will expire worthless. That's what I get for entering BCS at/near the ATH! For BCS I typically don't look for a 200-300% gain, those are too risky for me most of the time. If you're going to try for a 200-300% BCS, may as well just do bare calls (and I indeed do that periodically). For BCS, I look for between 50% and 100% over 12-24 months, those tend to look more safe to me. The best scenario is to buy the bottom half (as a bare call) during low volatility, and sell the top half during high volatility to convert the bare call to a BCS (or vice versa). I rarely do that because it requires following the market too closely, and I just don't do that. Weeks and months go by that I don't login to my account, and don't even look closely at my portfolio, and certainly don't trade. Basically, the only thing I do regularly is open the CNBC app and look at the list of stocks and list of bonds that I have there. And I do click on interesting business links that show up in various places (here, twitter, texts from friends, etc). EDIT: In fact, now that I look at it, that Jun '23 140/160 BCS that I discussed above is indeed a perfect example of a 200-300% BCS right now.
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,335
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Post by Dave on May 20, 2022 11:22:17 GMT -8
Where is the link to sign up for capitulation? Most brokers have a button for it ... it is usually labeled "SELL". 🤣 Yes, you may need to hit it repeatedly to notice a difference.
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mark
fire starter
Posts: 1,631
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Post by mark on May 20, 2022 11:46:24 GMT -8
Weeks like those we've had are why my LEAPs in apple are always super conservative - i.e. deep in the money - currently I have Jan $85s and $90s - hoping that is still conservative by the time this mess is over - hang in there folks! The problems with those LEAPs are twofold: 1. The expected return is pretty low. Right now the Jan '24 85 LEAPs (the Jan '23 aren't LEAPS anymore) are trading at $57-58. That puts breakeven at $142-143. Even if the stock ends at $200, you only have ~100% gain. 2. The amount of capital invested is substantial at those prices. You will be investing over 40% of the stock price! That means that you aren't using all that much of the "optionality" (the leverage) provided by options. It's also arguably more risky during economic dislocation. You put $57 into the option, the stock dithers around for a year plus, and ends at 120, option is worth $35, for a loss of $22, or 38%. Meanwhile, you could "control" the gains of just as many shares with less expensive, not deep in the money options, and you may lose 100%, but you put a LOT less capital into "control"ing those shares. I may be wrong about this, I hope others more knowledgable comment about this statement.
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4aapl
Moderator
Posts: 3,867
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Post by 4aapl on May 20, 2022 12:45:49 GMT -8
Weeks like those we've had are why my LEAPs in apple are always super conservative - i.e. deep in the money - currently I have Jan $85s and $90s - hoping that is still conservative by the time this mess is over - hang in there folks! The problems with those LEAPs are twofold: 1. The expected return is pretty low. Right now the Jan '24 85 LEAPs (the Jan '23 aren't LEAPS anymore) are trading at $57-58. That puts breakeven at $142-143. Even if the stock ends at $200, you only have ~100% gain. 2. The amount of capital invested is substantial at those prices. You will be investing over 40% of the stock price! That means that you aren't using all that much of the "optionality" (the leverage) provided by options. It's also arguably more risky during economic dislocation. You put $57 into the option, the stock dithers around for a year plus, and ends at 120, option is worth $35, for a loss of $22, or 38%. Meanwhile, you could "control" the gains of just as many shares with less expensive, not deep in the money options, and you may lose 100%, but you put a LOT less capital into "control"ing those shares. I may be wrong about this, I hope others more knowledgable comment about this statement. There's just tons of options with options, and what works for one person doesn't make sense to another. And then there's different times, and different conditions. I know I've change my focus, when I even think about options at all. In 2003-2007 or so, first it was straight calls with amazing returns, and then spreads with high returns. Many did amazing. Some lost lots into the start and end of 2007. And so now I'm mostly tempted by "just" ATM spreads, which normally are a coin toss of gain 100% or lose it all, which on an uptrend are fairly low risk. I can see a reason for a Jan 90 call at your stated $57. Instead of a 42% gain from $140 with the stock, you get about a 100% gain. Or looked at another way, you get a $60 gain with roughly $60 invested instead of $140. I think I was looking at Jan '24's, at something like 140-180/190/200. 180 should be (nearly) a given post recession/bear-market. And 200 should be pretty simple, with Apple not making any huge errors. Looking for a 200% gain potential just makes it worth the risk, especially on the time side. Green for the day, red for the week, for both AAPL and the S&P. It does make one feel slightly better, but for attempting to put in a bottom I would have preferred to stick in the red, and bear territory for the S&P. Especially into a weekend, both giving time for people to stew, but also time for any possible bad things out of the war, where bad things are more likely than good in the short term IMO. But this isn't a Wag the Dog propaganda trick where timing can just be made, even if "don't change horses midstream" might fit well unless you have a good plan.
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Post by dc930 on May 20, 2022 15:43:02 GMT -8
I bought at 136 after buying at 145 last week. All buy n' hold.
Appreciate all the diverse opinions here!
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mark
fire starter
Posts: 1,631
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Post by mark on May 20, 2022 15:58:22 GMT -8
The problems with those LEAPs are twofold: 1. The expected return is pretty low. Right now the Jan '24 85 LEAPs (the Jan '23 aren't LEAPS anymore) are trading at $57-58. That puts breakeven at $142-143. Even if the stock ends at $200, you only have ~100% gain. 2. The amount of capital invested is substantial at those prices. You will be investing over 40% of the stock price! That means that you aren't using all that much of the "optionality" (the leverage) provided by options. It's also arguably more risky during economic dislocation. You put $57 into the option, the stock dithers around for a year plus, and ends at 120, option is worth $35, for a loss of $22, or 38%. Meanwhile, you could "control" the gains of just as many shares with less expensive, not deep in the money options, and you may lose 100%, but you put a LOT less capital into "control"ing those shares. I may be wrong about this, I hope others more knowledgable comment about this statement. There's just tons of options with options, and what works for one person doesn't make sense to another. And then there's different times, and different conditions. I know I've change my focus, when I even think about options at all. In 2003-2007 or so, first it was straight calls with amazing returns, and then spreads with high returns. Many did amazing. Some lost lots into the start and end of 2007. And so now I'm mostly tempted by "just" ATM spreads, which normally are a coin toss of gain 100% or lose it all, which on an uptrend are fairly low risk. I can see a reason for a Jan 90 call at your stated $57. Instead of a 42% gain from $140 with the stock, you get about a 100% gain. Or looked at another way, you get a $60 gain with roughly $60 invested instead of $140. This is ONLY true if it hits $200 in time! And that will all depend on the timing of the recession. I remember the election year recession that cost Bush re-election. It happens, and it can happen again. The $57 of capital invested into an option has an expiration date. The $140 of capital invested into the stock has no expiration date. Huge difference. Even if the recession is late, or long, you will eventually get your $140 back and a good return (after all, this is a solid company, with a solid history, and solid future prospects). But if anything goes wrong timing-wise, some of your $57 could easily evaporate. I agree with this statement ... the whole issue is WHEN EXACTLY will "post recession" occur?
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,335
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Post by Dave on May 21, 2022 2:24:45 GMT -8
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