$AAPL Options action trade - mike

26 oct - mike with a ratio spread to recoup a loss on aaple, heres the video aapl clip . first off as you know from following me, what melissa says is incorrect, "since you are short that extra call you should always do this against stock" ..wrong... you can do this if you have an ITM call also. most viewers are not going to buy a couple hundred shares of aaple. you CAN do this ratio naked if you want but keep in mind that it will require margin because of that second short call...just like when you do a ratio PUT spread...you need margin because of that extra short put...check with your broker on how much margin you need

DEC 600 / 630 call ratio spread (buy one 600 / sell two 630 calls) for $2.00 credit

as usual i prefer to not go out that far on ratio spreads, i would do a Nov ratio spread first.. then do a DEC after Nov expires. historically the issues i have with ratio spreads is i dont take the strikes up high enough, in other words i am right but the stock takes off and goes through the upper strike. mikes is already a bit in the money, if sticking with the DEC options i would look at the 610/640 spread or the 620/650 ..for a move into holidays i would lean towards a thesis that stock moves higher than expected. BUT FIRST, i would do a NOV 605/625 ratio spread for flat.. profit range on that is 605-645.. if its at 645 or higher at Nov opex then reevaluate what levels look good for dec. you need that time decay to chip away at the short calls for ratios to work in your favor so if you go to Dec right away a short term up move will look like a loss until the time decay kicks in vs being able to profit via a Nov ratio spread. dont misinterpret mikes comments that come Dec opex you are out of the stock.. you dont have to sell the underlying..just keep trading these ratio spreads every month instead. you can have a nice income stream every month on just trading ratio spreads , especially if against multiple DITM Leaps like me. say mike gets that 630 pin and pockets a cool $3000...do it again for the next month, mentally lower your cost basis of the stock or Leaps underlying. lots of ways to chop down that money tree. and of course the overemphasizing talk of being "called away" at 660.. tell you what.. at 660 you are closing this ratio for zero, your stock at gained 60 points, and you are looking for another options way to bring in more coin..not selling and walking away... dont you think it will move higher if it moved from 600 to 660 by christmas? see all of mikes on-air trades in this spreadsheet