$AAPL Options Action web extra trade - scott

5 oct - this might be one of the goofiest trades yet.. goofy because of what scott is saying in his description, heres the web extra clip AAPL clip . viewer in a nutshell is worried about his aaple stock and thinks he should sell and instead buy a July 2013 660 call  (which is going for about $7400) .. lets make an assumption that Joe Viewer has 100shares . Instead, scott recommends to:

Buy the Jan 700 call for $30 ($3000)

What gets me is the phrase that by buying this call "i am protected to the downside if AAPL continues to fall".. how is that exactly? your $3000 goes down as apple continues to fall... saying you only spent $3000 on an option vs owning the stock and it goes down does not equal protection.. you just lost less. "but has to rally a bit before i get to participate again" he says next.. so thats the position you want to put yourself in ?? you think the stock is going down so you buy a call and it will still lose money and then you need it to rally a bit? seems really bass akwards thinking to me. how about this... since mr. viewer is worried about the downside.. keep the stock and instead do a put spread collar.. the Nov 675 / 650/590 collar . as in sell the Nov 675 call for about $20, then use that cash to buy the Nov 650/590 put spread for about $20.. so zero cost to get you $60 of downside protection...thats what i think of when i hear "im protected to the downside". also gives you $25 more upside potential. the thing is i think scotts trade will make money but im not buying the explanation..would use that $3000 and buy call spreads closer to ATM instead.see all of scotts on air trades in this google docs spreadsheet

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