I've been into the AAPL options as well...though not exclusively. How has the short strangle for income approach worked for you? I had employed a similiar method but realized I couldn't get my strikes wide enough to avoid the inevitable juke driven by one major news event. As far as AAPL is concerned, I've just cut my trade size and put on a few long JUL 100/110 call verticals. This is one of the few stocks where I'm just willing to put technicals aside, go out a few months and take a long position, given the recent dip / consolidation. I sure could lose, but the risk is worth it ($2.00 for that vert spread...)
I usually sell strangles across all the available months for the upcoming year, at stikes where the option is in the 2-4 dollar range. If the options are too cheap, I look to sell a month further out. I usually close them out couple of weeks before expiry, or when they've eroded at least 50-70% or so in value, when the risk/reward benefits are no longer there. I often leg into the spread, puts first, if we have sharp dip, which gives me an extra cushion. If a put goes against me, I'll normally let it be exercised, since I'm also pretty bullish on AAPL.. If the call goes against me I'll generally close it for a small loss, and consider taking the the profit on the pt to compensate. Other factors when choosing the strikes include :- - open interest. If two strikes have particularly large open interest, I oten sell the most OTM one. - TA.. ideally sell them just outside key support or resistance - gut instinct.. I've followed AAPL day in, day out for two years now, and I've got a good feel for the parameters of the stock. I also like to stagger my selling as much as possible, maybe one or two contracts per day, so if it goes against me, I'm only partially commited and can sell more options to fade any adverse move. I'm pretty conservative like this. as a rule I only sell puts at prices I am happy to buy the stock at, and will close out short calls as soon as they go more than 25% against me. overall, the strangle selling is good for 5-7k a month on a 150k account. As for for july, I'm short puts at 65, 70 and 75, and short calls at 100, 110 and 115. Depending on what happens regarding the iPhone I may have to close out the calls early, but the last few years AAPL has been weak in the summer so I'm pretty happy with these strikes. I am also just starting to slowly build a position in jan 100-110 bull spreads, ( currently around 2.90 for the spread), and have buy orders for these set up all the way down to 0.50 a spread. reward's only marginally worse than the july100-110s, but, given the traditional xmas run-up, these are a less risky bet for me. hope this helps
Thanks, that's more information than I could have hoped for...I will definitely take another look at the strategy...
Hi I'm curious as the motivation for this self-imposed public challenge. The target seems arbitrary and even unambitious (why cap?). If achieved, will it be repeatable? The time period of 12 months may not coincide with your equity curve so you may be inclined to force trades at the end. (It's also long enough for you to get lucky.) I hope you achieve your goals and take what the market offers without forcing anything just to impress or meet some deadline. This kind of unnecessary pressure is just the opposite of what I look for in my nascent trading career so I am genuinely curious as to why you are doing this, I'm not criticising.
Update for Week 3 ended 3/9/2007 ----------------------------------- Sigh of relief. Good week after the disaster that was last week. Did any body catch the bounce in LEND? Entered in at 5.00 on Wednesday, exited at 5.40 (too chicken-hearted to stay to close of market). Wondering what the balance on my account would have been if I had stayed till today. But such is trading. Balance B/F: 64,135 Profit for the week 14,277 ------------------------------------- Balance C/F: 78,412 Number of Trades 24 Number of Profitable Trades 16