I like Apple. I think the stock will at least hold steady, or might go up over the next month. If it does, I expect to double my money with an options strategy I have just set up. Today I would like to share that strategy with you in a short video. Check it out here - http://youtu.be/6J9KPuimyXk
I hope you will enjoy it.
Interesting AAPL Stock Options Strategy
In spite of the big run-up in the price of AAPL since it announced blow-out earnings that exceeded all expectations, I think the stock has more room to go up. It is still . . .
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Greetings!
Last week I shared the actual positions we held in what we call our Shoot Strategy portfolio (which uses AAPL as the underlying). Last week was a great one for AAPL. The stock rose 7.3%. Our portfolio gained 22.1% after commissions, or more than 3 times the amount the stock went up.
One of the potential problems of the options portfolio is that the stock goes up too fast. When that appears to be happening, as it did in Apple last week, adjustments need to be made. We will talk a little about those adjustments this week.
Terry
Making Adjustments to the Shoot Strategy
First, let’s repeat the table of the actual positions . . .
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Two weeks ago, Apple announced blow-out earnings that pleased just about everyone who follows the stock. Since that time, AAPL has soared by 9.2%. Owners of the stock are celebrating.
Meanwhile, the actual options portfolio we carry out at Terry’s Tips increased in value by 42.5% over this same time period. Options outperformed the stock by more than 4 times.
Today I will share with you the actual option positions we hold in this portfolio, and show the potential gains (or losses) that lie ahead. This is an important report that I hope you will read carefully
Why Owning Options Beats Owning Stock
In April, 2010, we set up a $5000 portfolio to demonstrate that a well-designed options portfolio could substantially outperform the outright purchase of stock. We selected AAPL as the underlying, a company we thought had a good future.
We never imagined that future would be quite as spectacular as it has been so far. The stock has skyrocketed by 72% since then. Meanwhile, our options portfolio has gone up by 263%. Our subscribers who mirrored our portfolio from the very beginning have gained over 3.5 times as much as they would have if they had merely purchased shares of AAPL.
We withdrew $3000 of the original $5000 so new subscribers could mirror the portfolio with a smaller investment. The original investment, now $2000, as grown to its present value of $12,141 in 21 months. Not bad by any standards, if we do say so ourselves.
How did we do it? Quite simply, we bought call options with a few months of remaining life and sold call options with only one month of remaining life against these positions. The shorter-term calls we sold to someone else decay at a faster rate than the longer-term calls that we own. This gives us a major advantage over anyone who has just gone out and bought shares of stock.
In options terminology, we created a portfolio that maximized net delta (the equivalent number of shares of stock we own) as long as there was positive theta (which means that the portfolio would make a small gain every day that the stock remained absolutely flat).
Here are the actual . . .
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