$10,000 Income Portfolio

[GOB]

one among many benefits of a forum like this is that seeing how others handle certain stocks can push one into rethinking one's own strategy.

in aapl i've been doing a craven, cowardly custard pie strategy. Gob's exploits have caused me to rethink.

i've decided i'll be a put seller only. Because i always have excess margin, so the margin cost of an array of puts will be zero. If assigned, i'll muster the cash.

out goes the cowardly custard. In comes prosciutto quiche w serrano peppers & a big dollop of wasabi on the side.

as my kids used to say on the cross-Channel ferryboats, Everybody to the Mustard Stations !

Good luck! This journal has validated my strategy somewhat. Even if I were to liquidate my portfolio after this 10% drop, I'd still be up from where I started. We've seen two extremes since I started - a rapid rise and a rapid drop. Anything in between will be a piece of cake to handle after this. Of course, things could still get worse. As I've been saying from the start though, if I lose money here it means AAPL will be at a price that represents extreme undervaluation, and a price where LEAPs will be dirt cheap.

[humble_pie]

i don't see any value in the LEAPs right now, nor have i ever.

i was checking idly whether any nice diagonal might be present ... but that 2015 600 call would cost something like 150.00, while a july 700 call might find 50 or 51 ... nah, there's no money in this for a poor hardworkin tart ...

[GOB]

If timed correctly, LEAPs can be amazing. In spring 2011 I entered a Jan 2013 $500 call for just under $3,000 - turned into a $17,000 profit when we were flirting with $700. I'm still up $11,000 right now. I'm a huge fan of LEAPs

[humble_pie]

i looked carefully before i LEAPed

bt 1 aapl 2015 jan 400 @ 257.00 cost 25,711.24
sld 1 aapl 2013 jul 700 @ 45.85 proceeds 4,573.65

[GOB]

I decided this morning when we were in the $620s to give my deep red put a little more time to play out, lower risk a little and free up a tiny bit of margin.

Oct 9
Bought to Close: 1 AAPL 19OCT12 $695.00P @ $62.55: -$6,255.69 (Total profit -$2,346.16)
Sold: 1 AAPL 16NOV12 $685.00P @ $63.95: +$6,394.17

It looks like the end of the bearishness may be near. There was quite a nice bounce at the 100 day EMA which is traditionally a great support level for AAPL. I have a feeling we could get back to $685 in short order, before my November put expires.

Humble, good timing with your trades. You could get a nice double on that LEAP.

[Argonaut]

Nice move. You gain some time, lower the strike, and add cash to boot. Stealth.

[humble_pie]

that was rolling em out mille feuilles. It's almost impossible to imagine apple managers letting production problems get out of hand for long.

for my call spread, there won't be any double on the leap. The short july 700 is the other half of a diagonal spread. The most i might collect in this present edition is $30 while cost at present is about 21.14, so max profit is capped around 8.86. Which at 8,860 is not to be sneezed at.

it's likely that cost will be written down again & again during the 34-month life of the spread, as the short-term calls get sold.

[Lephturn]

I rolled my Oct spread but had to widen it for a credit. Probably shouldn't have done that, but we'll soon see.

Opener was:
09/24/2012 Sell To Open 4 AAPL Oct12 675 Put $11.30 $4,512.42
09/24/2012 Buy To Open 4 AAPL Oct12 670 Put $9.74 ($3,903.48)
Net $608.94

Rolled to:
10/10/2012 Sell To Close 4 AAPL Oct12 670 Put $32.86 $13,137.70
10/10/2012 Buy To Close 4 AAPL Oct12 675 Put $37.25 ($14,906.00)
Net ($1,768.30)

10/10/2012 Sell To Open 4 AAPL Nov12 625 Put $23.19 $9,269.79
10/10/2012 Buy To Open 4 AAPL Nov12 605 Put $15.93 ($6,378.00)
Net $2,891.79

Total so far: $1,732.43

I widened the spread which was probably dumb. Otherwise I was in debit land. by $400 or so. I'm now rolled down and out to Nov so I can watch and see. Thoughts guys? Was widening it really a bad idea?

The new position is Delta=40.06 Gamma=-0.27 Theta=10.45 Vega=-31.08

Heavy negative vega position here, so provided the stock recovers as I expect I should gain value quickly as the vol comes in. The other spread got killed because the negative vol position overwhelmed the theta of the position in addition to the loss from delta and gamma exposure. I should have done a snapshot of the old position before I rolled it to compare the resulting greeks but I'll try to remember that for next time.

[GOB]

Lephturn, you should be fine. In fact, once I get rid of my $610 put next week (hopefully), I'm going to get into some BuPS, either weekly or for November depending on the pricing. They offer great returns, I don't know why I stopped playing them.

[humble_pie]

morning lephturn this looks to be putting you in a fine place. The spread is not too wide at all imho; in fact the way things are now running (up) the wide spread helps to offset the fact that the sold 625P may turn out to be a tad on the low side.

another good feature is the short term, so you are well-positioned for any iMini news that might break & also for Xmas sales in iPhone5.

for my part i've rec'd 5028.00 for selling 1 jul 600P plus rec'd net 3182.50 for rolling 1 apr 550P into a 2nd jul 600P, for a total of 8,210.00 cash on hand. I have no cover & right now am ready to pay 120,000.00 should both puts be assigned, although the situation could change & requires monitoring.

the fact that there will likely be little to do in aapl puts for the next 6 months is highly appealing to me. I've collected 8,210 in cash upfront & have other option positions to look after in the meantime.