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Message from discussion Conservative options strategy on AAPL, if you are okay with 118% returns by January 2009....better than owning the stock.
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peregrinepha...@gmail.com  
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 More options Jan 30 2008, 12:55 am
From: peregrinepha...@gmail.com
Date: Tue, 29 Jan 2008 21:55:21 -0800 (PST)
Local: Wed, Jan 30 2008 12:55 am
Subject: Re: Conservative options strategy on AAPL, if you are okay with 118% returns by January 2009....better than owning the stock.
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That's a very bullish way to invest as well.  As long as AAPL is above
$110 in JAN 17, 09 then your good but if for any reason it does not
then you would have to buy back your PUT at a much higher premium and
maybe lose money if it becomes more then what you sold it for or
you'll have to pony up $110,000.00 to buy the 1000 in your 10
contracts.

Either way it's bullish and I'm long on AAPL so it should definitely
help your trade.

ArpanGup...@gmail.com wrote:
> I am bullish on AAPL, but not bullish on the market.  Who knows what's
> going to happen.  If this is like 2002 it could be bouncing 10% right
> now just to sell off another 20% by next summer.  Either way, I'm
> happy making 100% returns in a fairly low risk play I believe.

> Many people think...no...no...no...no...no I'm not going to deal with
> naked options, but hear me out.

> Sell January 2009 Naked Puts on AAPL Strike price 110.  The premium is
> 13$.  What does this mean?
> Basically you will buy Apple from anyone for $110 til January
> 2009....so your net cost is an Apple share for $97.  Shoot, I'd be
> comfortable holding on to shares at that price if a nuclear bomb hit
> Cupertino.

> The margin requirement for such a trade is that you hold 10% of the
> strike price in cash in your account.  So basically, for every $1100
> cash you have in your account, you can sell 1 contract for a $13
> premium....so you will take in $1300.  Now of course you do not have
> the right to the premium until the contract expires, or you buy back
> the puts.

> This strategy lets you make money in two ways.....
> 1) Hold to maturity and make you 118% as long as Apple does not close
> below 110 in January 2009.
> 2) If Apple shoots up to say 150 in the next month, these will be
> worth about $7 each....so buy them back and make your 50% profit in
> one month...or however long it takes.

> I did this last week.  I sold 10 conracts of July 2008 for $8.5 each
> strike price 110.  I bought them back for $7.05 when Apple went to
> 136.  I sold March 125 for $7.5 each and bought them back for $5.  But
> I am trying to say what I think a good conservative strategy would be.

> Think about it, let me know what you think....maybe I'm nuts.


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