Stock replacement trade for $AAPL

got to thinking about my Deep in the Money (DITM) diagonal spread strategy and will throw out a suggestion after seeing a twitter post from @kgirljohnson. she has been making some good cash selling covered calls a few months out and selling puts. first off kudos to your bank account for having 700shares of AAPL. here is a possible alternative to boost the cash flow if you are in a similar situation. using pricing as I type now and making some educated guesses:

so having 700 shares of AAPL, sold 5lot of the Jan 275 call at $5 for nice $2500. now what to do with the other 200 shares... 200 shares is about $53200. instead of selling 2 additional covered calls..

Sell the 200 shares and replace that block with deep in the money Jan2022 calls specifically the Jan2022 210 calls going for $76ish ($7600 per contract) and .80delta. with a limit order might be able to get a 7 lot.

now you have 500 shares of the common and 7 call contracts. Now sell the Jan2020 275 calls against the 2022 calls turning it into a diagonal spread. 7 short calls at $5 gives you $3500 in additional premium in addition to the already collected $2500 from the covered calls for $6000 total. the .8 delta on the 2022 calls means the option move 80% of the stock movement. stock goes up (or down) 10 bucks the option moves 8bucks. and then repeat the upside option selling in future months. earnings are at end of Jan so premiums will increase. yes there is a likely tax hit on selling the 200 shares.

I personally own no stock instead I own the deep in the money calls from 2021 or 2022 since I don't have the bank roll to own 100's of shares of these high dollar stocks. can buy multiple calls and increase my premium stream and I participate in upside moves.

Just a thought, a couple months of $6000 premium gets you that new Cybertruck.

Kayla Johnson

@Kgirljohnson

Got the $5 right at the end of the day!

STO 5 Jan $275 strike calls against stock. $AAPL. $2500 dividend!
Looking to sell another 2 lots of 5 if we continue higher. Will wait till Fri. to enter order, maybe the Turkey high pops Apple up some more.

Enjoy time with your family!