new $AAPL setup 8mar

pretty similar to the previous levels i was looking at.. after taking profits earlier on some spreads i am looking for the following, had the 2 days of selloff this week, ipad 3 buy rumor sell news B.S. , so nowwill use that level to shoot against for an entry. low during that panic was 516ish i believe so if stock pulls back to near that area (doesnt have to be to the penny, use the fat crayon method) then will look again at the strikes below the 485 support line. the 50day MA is approaching quickly so might want to look under that as well. initial alert at 530 to get it on my radar. Trademonster lets you "save" an order along left side of screen and one-click it to send it to market so i have an order worked up as well

A Breakdown of Diagonal Spread Advantage vs Covered Call $AAPL

heres why i like diagonal spreads..say you have the cash to buy 100shares of $AAPL at about 533.($53000). you would like to get some monthly income and write some covered calls, the Apr 565 call is going for about $10 ($1000)... so you profit from stock going up to 570, almost $40 worth of upside. not bad, closes under 560 you keep the stock and the $1000 from short call..good coin.. instead look at the following, using that same $53000:

buy 3 Jan2014 400 calls for about $170 each ($17000 each)

so for almost the same amount of money you control 300shares worth of stock via a deep-in-the-money (DITM) Leap.. since you own the calls you can SELL short term calls against it for no added margin..just like a covered call with stock, so now:

sell 3 Apr 565 calls for about $10 each ($1000 each)

so you collect $3000 on these short calls vs just $1000 on a covered call with stock. the 2014 call has a .80delta so your call moves .80 for every 1.00 of stock move so you benefit from upside move as well.. more so since you have 3calls vs just 100shares.

Actions:
1. stock closes below 565, keep the short call premium and sell calls again the next month, and repeat every month just like you would with a covered call.
2. stock takes off, can either roll the short calls or close out both legs of diagonal
3. stock drops alot..can add ratio spreads as trade repair month to month or keep selling short calls...its a 2014 leap so you have 2years to do this every month, every earnings, every ipad refresh announcment, etc

its not for everyone but for me its a better use of the cash i have...$3000 call premium off of $50000 investment every month is not bad.

$PCLN earnings strategy

update 28feb - per the strategy below i took profits on the call fly.. stock traded into the priced in box on chart. also closed both legs of the diagonal to take profits there. out of $pcln now.



earnings after the close on 27feb. heres my strategy. i currently have a DITM leap and a short 500 call.. yes, thats a 500 call..stock has run so much that its way in the money. i want to make a low premium trade for an upside move from earnings. the weekly options are pricing in about at 50point move in either direction (add the ATM call and put prices to get that)..so if pricing is accurate that puts the stock into the red boxes on chart.. i will be looking to buy the weekly 630/640/650 call butterfly on monday.. 650 was the highest strike available on weeklies, if higher strikes are trading i may revise this. So this call fly will profit if the options market has the move accurately priced.. if it spikes up i will take profits the next day and not try to press my luck and ride it out to friday opex since thats 4days away by then.
    since my diagonal is way in the money..the "position"is not benefitting from any up move since the Leap is gaining and the short call is loosing about the same about, so rolling the short call up to next higher strike at 505 or 510 for next month still is only getting me chump change if anything. so if stock spikes up or really even if it stays unchanged i will close both legs of the diagonal..take my profit from the months of short call premium i was receiving and move that capital into another stock..maybe an $AAPL diagonal.
    I am not "playing" for a down move on earnings, such as a put fly in addition to the call fly.. but if the stock sells off and gets to the red box expected area..especially if earnings are good but market sells it off anyway..(bullshit selloff as i call it)..then you have some good support levels to shoot against for credit put spreads.. all the moving averages are together near 510ish..so spreads to be at/below that level, maybe even below the 470 support level. depending on size of selloff, i may then roll the short call up to the Apr510..likely for credit.

Summary:
a. stock moves up as priced in..630/640/650 call fly profit and close diagonal to use capital elsewhere
b. stock moves down as priced in then look at credit put spreads and keep diagonal rolling up and out on short call for credit
c. stock unchanged, likely close diagonal and move capital elsewhere.