AAPL today.

Discussion in 'Options' started by youngtrader23, Apr 24, 2012.

  1. Today I traded options for the first time (with assistance from my MSSB financial advisor)...

    Here's what we did:

    Long 1 AAPL 560 April Call
    Short 1 AAPL 600 April Call

    The stock is hovering around $600 after hours and I've made 100% of my investment. Did any else trade the April call? The other contracts were too pricey so we stuck with the April one.

    What would you have done different?

    Still wrapping my head around options...
  2. I had a similar trade. Long 580, short 585. And yes, it will be profitable tomorrow
  3. How did the short options help?

    580/585 = $1.60 to $5.00 = 3x
    580 = $7.80 to $21.00 = 2.6x
  4. Young Trader, this is how you trade Apple options.

    Pop Quiz: Will my position be profitable when the market opens tomorrow?
  5. Hmm. I sent you a message but I'm thinking not. If I'm wrong--plz explain!
  6. lulz, you have a MTM loss of $57,000 on a 10 lot. So my guess is that you'll still be underwater unless we open above $615.
  7. this week we blow past $650. We close at $625 or above tomorrow. another 100 points in the green for the dow tomorrow.
  8. You're still underwater at the current mark of $604... and one small detail.... I just checked T&S and that call had never traded (ever) at 158.55, which is your paper fill on this sim-trade.

  9. This is arm-chair quarterbacking on my part, but aren't both of you giving up a lot of upside potential when you play the spread vs. the straight call in an earnings play?

    For example, on the 560/600 vertical, for an additional risk of about $300 (downside buffer of about 20% on your long call), you had unlimited upside potential which turned that 100% in to a 300% gain.
    In addition, you only needed half the move to occur to reach your 100% gain on the long call.

    Now, normally I like spreads, but you were long in to earnings, which means you were bullish and expected the stock to pop (or so I assume). Apple has a recent history of beating earnings (typically they seem to set the guidance kind of low), so that's another factor to consider.
    Both good trades, but possibly a bit too conservative given the setup in my opinion.
    Just my $0.02.
  10. @TheGoonior -- So you would have just called 1 lot at 600? I am thinking of doing something similar tomorrow--just calling at 650 for the May contract. Am I using the correct language?
    #10     Apr 24, 2012