Monday, August 27, 2012

those $AAPL diagonals

right now you are thinking AAPL is never going down again.. all those positive catalysts coming up..the stock has been up 100points in a month or so.. my Jan2014/Sep 600 and 610 short calls are way in the money. heres my thought process. Sep is historically the worst month of the year per cnbc, everyone on one side of the boat again on AAPL also. the deltas of the short calls are right about 90 right now so i still will get a little bit of time decay for rest of SEP. Stock has the ability to sell off like it did in april /may, could do so again either on product announcement disappointment, general market selloff, EU issues..anything. but instead of closing this spread now or rolling to Oct now, im going to keep it on, the short calls will provide me a huge hedge to the downside for the rest of Sep opex.. i anticipate having to roll up to Oct in a few weeks, would like to gain at least 10points in the roll, maybe 15. might have to pay a bit to do so. but these new strike levels will give me good levels to shoot against for new credit put spreads when the time comes. also these new higher strikes will also have added time decay in them as well..the best time to roll forward to get the math working for you is if you can wait for a good size down day..might even get a 20point roll to higher strike for flat or slight credit, if that happens and i can roll for 20points higher i will do so early. rolling on a up day especially a gap up day is not the best time to do it.

   so no real downside to holding the diagonals longer, but get that huge downside hedge, still some chumpchange time decay.. as we all know, stocks go up , stocks go down.. alot can happen till Jan2014 opex for the Leaps

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1 comment:

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