I cover what I’m trading and how I’m looking at stocks and options. I can’t predict markets, stock prices or interest rates. Nobody can. All we can do is trade.
Hi, just found your blog. Great info, if I was to sell a cover call at AAPL, what would you recommend? I don't plan to get it assign. Great blog, bookmark.
Thanks. Welcome and I appreciate the question. In some respects, Apple is "too good" for covered call writing. It is one of those stocks that has great potential and you don't want to sell and have it get away from you as CAT and MSFT did on me.
On the other hand, AAPL has very heavily traded and liquid options. And it has a lot of depth. I still have some CAT, which I don't want to sell.
Depending on market conditions and whether we're in an earnings season, or not,
I sell way out of the money weekly calls 2 or 3 days before expiration. On AAPL, for example, the stock is $170.33. Trades are being done as deep as the $225 strike. But I would go for about a 4.5% annualized ROR by selling AAPL 2.4.22 (4 days, or less, if you wait a day or two) $182.50 strike (delta 0.05) for about 12 or 13 cents, give or take. The option price will change with the stock price. The delta indicates there is about a 5% chance the stock will be exercised.
Resistance is at about $183, Support is at about $155. If you think the stock will continue Friday's pop, hold off for a day and sell at a higher strike and options price. If the premarket price looks week, you might want to do the trade about 30 minutes after the open. Again, if you're not sure, wait a couple of days and then make a safe trade.
Alternatively, generate income without risking assignment of calls. If you have the cash to back up a cash secured puts trade, look at selling AAPL 3.18.22 (47 days) $140 puts at about $1.17. RoR would be about 5% annualized on top of the measly 0.52% dividend.
Let us know what you decide. Doing nothing is fine. It's a decision we all make all the time.
At 11:04 a.m., EST, AAPL is up $7.66 to $166.60. CAT is down $12.06 to $199.75. DIA is down $0.67 to $340.76. If I sell puts on these equities, it will be at -.10 to -.15 deltas and at strikes that wold assign the stocks at 10% to 20% discounts to current prices. At this point, it is unlikely that I'll do any trades today.
Congrats on your newsletter. Enjoying your posts. You might want to compare 2/18 AAPL Covered Call vs. Cash-Secured Put position. Since AAPL has an small ex-dividend ($.22) prior to the monthly 2/18 options expiration date (ex-div on 2/4). Although CCs and CSPs are synthetically equivalent, I've usually found that the potential annualized-return-on-investment when their is an intervening ex-div prior to the options expiration date (on short-term positions--i.e. 30 days or less duration), a CC provides a small advantage to its counterpart CSP when comparing their respective potential Annualized ROIs.
Thanks, Jeff. Takes me back to the Yahoo Groups days. I'm focusing on CSPs in this market while trading both CSPs and CCs on my holdings. I plan to write up your blog pretty soon. Hope that's ok. Are your reports on your trades in spreadsheets? How many variables do you have to enter in a spreadsheet each time you do a reportable trade? Don
Hi, just found your blog. Great info, if I was to sell a cover call at AAPL, what would you recommend? I don't plan to get it assign. Great blog, bookmark.
Thanks. Welcome and I appreciate the question. In some respects, Apple is "too good" for covered call writing. It is one of those stocks that has great potential and you don't want to sell and have it get away from you as CAT and MSFT did on me.
On the other hand, AAPL has very heavily traded and liquid options. And it has a lot of depth. I still have some CAT, which I don't want to sell.
Depending on market conditions and whether we're in an earnings season, or not,
I sell way out of the money weekly calls 2 or 3 days before expiration. On AAPL, for example, the stock is $170.33. Trades are being done as deep as the $225 strike. But I would go for about a 4.5% annualized ROR by selling AAPL 2.4.22 (4 days, or less, if you wait a day or two) $182.50 strike (delta 0.05) for about 12 or 13 cents, give or take. The option price will change with the stock price. The delta indicates there is about a 5% chance the stock will be exercised.
Resistance is at about $183, Support is at about $155. If you think the stock will continue Friday's pop, hold off for a day and sell at a higher strike and options price. If the premarket price looks week, you might want to do the trade about 30 minutes after the open. Again, if you're not sure, wait a couple of days and then make a safe trade.
Alternatively, generate income without risking assignment of calls. If you have the cash to back up a cash secured puts trade, look at selling AAPL 3.18.22 (47 days) $140 puts at about $1.17. RoR would be about 5% annualized on top of the measly 0.52% dividend.
Let us know what you decide. Doing nothing is fine. It's a decision we all make all the time.
Thanks for the reply and the deep info.
At 11:04 a.m., EST, AAPL is up $7.66 to $166.60. CAT is down $12.06 to $199.75. DIA is down $0.67 to $340.76. If I sell puts on these equities, it will be at -.10 to -.15 deltas and at strikes that wold assign the stocks at 10% to 20% discounts to current prices. At this point, it is unlikely that I'll do any trades today.
Congrats on your newsletter. Enjoying your posts. You might want to compare 2/18 AAPL Covered Call vs. Cash-Secured Put position. Since AAPL has an small ex-dividend ($.22) prior to the monthly 2/18 options expiration date (ex-div on 2/4). Although CCs and CSPs are synthetically equivalent, I've usually found that the potential annualized-return-on-investment when their is an intervening ex-div prior to the options expiration date (on short-term positions--i.e. 30 days or less duration), a CC provides a small advantage to its counterpart CSP when comparing their respective potential Annualized ROIs.
Thanks, Jeff. Takes me back to the Yahoo Groups days. I'm focusing on CSPs in this market while trading both CSPs and CCs on my holdings. I plan to write up your blog pretty soon. Hope that's ok. Are your reports on your trades in spreadsheets? How many variables do you have to enter in a spreadsheet each time you do a reportable trade? Don