Oct600 call at about $7200
Oct670 call at about $2600
so by rolling from the 600 to the 670 you will receive about a $4600 credit. you would do this if your thesis is that stock continues upward and the 670 gives you some more leverage to the upside..sure..i guess..alot can happen till Oct opex.. look at it this way.. if you didnt have the 600 call..would you buy the 670call outright..would you spend $2600 on an upside call like that.. i wouldnt. instead i would keep that oct 600 and sell either the Sep monthly or weekly upside calls till opex in oct. , maybe start with next weeks 685 short call for about $275 and try to get $200-$300 a week in income.
or i would take the other side of scotts trade and "spread it out" by SELLING the Oct670 call for $2600 and giving you a max gain on this spread at $9600 as the time value decays on the short call. in the spreadsheet i will just close out the trade with a win instead of tracking the 670roll seperately. good trade
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27July ..scott nations with the options action web extra, here the clip web extra . covers a viewer email about AAPL. talks one of my favorite trades , that being a risk reversal.. the post-it note i have on my monitor says "wait for a big down day to sell puts and look at risk reversals" .. so the time to do the risk reversals was the next day after earnings when you saw the carnage was not continuing CMG style. anyway.. scott recommends putting on a Risk Reversal on $AAPL as an alternative to buying the stock here and as a way to limit the risk. with the stock at 575:
Sell the Oct 550 put for $19.50
Buy the Oct600 call for $17.25 -- all for a $225 credit
now this is ok, but as usual what is not mentioned is that since you are selling a Put you need to have the margin/buying power to buy the stock at 550 at opex in oct. so figure $55000, so its not a free trade.. and i dont recommend you go into margin to put it on unless you have a big bankroll. the other thought is that its a bit far out into the future, i would look to do something in SEP first. next scott mentioned that the worst thing that could happen is you get long the stock near 550... second worst for me would be to be correct on direction and still not make money. so most viewers, especially those that write to OptionsAction for advice will not be trading in and out , but will hold to near opex.. so at opex the stock would have to be above 600 to make money.. i dont like being in a position where the stock (using scotts 575 price) as to go up 25bucks first , and then i make money, yes, i know it will start being profitable if stock moves up, but my expectation is hold to opex for JoeSixPack viewer.. i want to be able to make money right way, so using the closing prices (585) i would make this a call spread risk reversal
Sell the Oct 565 put for about $20
Buy the Oct 585/640 call spread for about $19ish -- all for flat to $100 credit
still have to have margin/buying power set aside but come Oct opex and stock is at 600.. mine makes $1500 vs zero for scotts... i am ok with "caping my upside" at 640.. that will mean a $5500 profit at 640.. point being is i want to have profits start now not at 600.. why did i pick the 565 strike? because the lowest the bears could take the stock after earnings was 570ish..so im right under that level.. which is still getting long the stock $20bucks lower than today.. just a thought.. both will likely make money on the ramp up into next earnings, iphone 5, new ipad,tv , etc. see all of scotts on-air trades in this google docs spreadsheet
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Tell Cramer to get over himself He is too loud offensive He was better off the morning show...no one wants to hear him first thing in the morning then he cried that was disgusting...he need not be on morning afternoon and night get him off the morning show
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