AAPL; today's covered call play

[hendi_alex]

I added to my over sized AAPL position today. Won't be over sized when options get exercised this month, as most shares will get called. Just picked up a few shares as a cover call play with modest objectives. Bought @$524; sold Oct $525 calls for $33.50. If the shares get called, then I make about 9% for the holding period of roughly six months. If the shares don't get called, then I own shares of Apple with an effective share price of under $500. Either outcome is satisfactory. I chose October strike because it goes out about six months to give a decent contract price, also if the market has its typical October weakness the shares are less likely to get called, and I wouldn't mind having a small core of AAPL to be held for longer term.

[rnsmth]

(04-07-2014, 03:19 PM)hendi_alex Wrote: I added to my over sized AAPL position today. Won't be over sized when options get exercised this month, as most shares will get called. Just picked up a few shares as a cover call play with modest objectives. Bought @$524; sold Oct $525 calls for $33.50. If the shares get called, then I make about 9% for the holding period of roughly six months. If the shares don't get called, then I own shares of Apple with an effective share price of under $500. Either outcome is satisfactory. I chose October strike because it goes out about six months to give a decent contract price, also if the market has its typical October weakness the shares are less likely to get called, and I wouldn't mind having a small core of AAPL to be held for longer term.

Good move. i have a core AAPL position. Should get a capital allocation announcement this month, maybe during the earnings call.

[NilesMike]

Alex,

Have you ever or would you ever create that position using a synthetic covered call? (Buy a 450 call with 1-17-2015 expiration for $83.00 +/- and sell calls against it).

One would forego the dividend (I know this is a dividend forum) but hvae a significantly greater potential return.

Just asking, good luck to all.

[hendi_alex]

That starts getting too abstract for my fuzzy old brain.

[NilesMike]

(04-08-2014, 08:13 AM)hendi_alex Wrote: That starts getting too abstract for my fuzzy old brain.

Got it, thanks for the reply.