Thursday, June 14, 2012

rolling the $aapl short call

been yapping about milking the June 575 short calls ive had on that next weeks options are on the board you have some other choices. here is the thought process i used to decide on next weeks. July opex has 5 weeks in it instead of the usual 4.. Prices as i was thinking this up:

June 575 - $200
next weeks 575 - $800
July 575 - $1850

im going to assume that stock bounces around a range till july opex..could be right could be wrong. so quick math you can see that closing this weeks call and selling next weeks call nets me $600 in credit. if i rolled to July then it would be $1650 credit..but since its 5 weeks till july opex i can possibly roll week to week for $600 which would exceed the $1650 from just the roll to july.. thats the perfect scenario of course if stock stays range bound.. will see how it turns out after a few weeks.. if stock takes off i will probably just roll the weekly to the July for a credit.. win / win

remember with diagonal spreads the movement of the stock (LEAP) is irrelevant since its a jan2014 leap..just focusing on the capturing as much of the premium as possible on the front month/ weekly options.

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