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Apple Bull Calls too easy?
- Thread starter StockHustler
- Start date
I see, now that makes sense. Thank you for your replies.
If one is very bullish then buying a calendar isn't the best strategy. Furthermore if vol collapses your calendar will loose since it's long vega.Quote from ethos:
No: Buy Jan, Sell Nov.
Nov decays faster then Jan, so you are protected from that side.
If Nov call expires worthless then you have Jan call for less. If Apple gets above 180 before Nov call expires then your profit will be very small. I'd close the spread if price gets to or slightly above 180.
You'll lose if Apple goes down, but the loss is limited to the initial costs.
I did this 2 weeks ago, the stock is more expensive now. I paid about $3.7 per share for the spread ($6 for Jan - $2.30 for Nov).
db
Quote from daddy'sboy:
If one is very bullish then buying a calendar isn't the best strategy. Furthermore if vol collapses your calendar will loose since it's long vega.
db
Agree. Best play if you are strongly bullish is (1)buy stock, (2)buy call vertical and (3) buy at or slightly in the moneys with three or fourth months on them.
Well I won't be buying the stock because I don't have enough capital to do so and also is much more risky if it were to fall instead of just losing the premium. Buying the vertical is a good idea and I may very well do so, some Nov and Jan OTM calls.
I know that time decay is a concern but I thought time decay really isn't too big of an issue until the last few weeks before expiration.
Earnings are on the 22 of October which gives me plenty of time until Nov expiration. This is why I would like to stick with Nov calls probably the 240's or 250's.
I know that time decay is a concern but I thought time decay really isn't too big of an issue until the last few weeks before expiration.
Earnings are on the 22 of October which gives me plenty of time until Nov expiration. This is why I would like to stick with Nov calls probably the 240's or 250's.
cszulc, that was the answer to my question.
So I would realize a better ROI (because of the higher delta) with less ITM calls rather than more OTM calls.
I was under the train of thought that more was better. Thank you again for the reponses.
So I would realize a better ROI (because of the higher delta) with less ITM calls rather than more OTM calls.
I was under the train of thought that more was better. Thank you again for the reponses.
IV rose while price dropped. For ITM calls, the loss of intrinsic overwhelmed the increase in premium due to IV expansion so the option's price dropped.Any ideas on why the Nov calls over 200 are the only calls that have actually gone up when the stock has dropped and all other calls have dropped? This is very perplexing to me.
For OTM calls, there's no intrinsic loss and the premium increase due to IV increase more than offset the premium lost due to AAPL dropping a point. So the calls rose.
That's not necessarily true. ITM with higher delta has a better chance of making a profit but OTM gives you leverage and with a good up move, OTM provides a greater ROI. But w/o that move, OTM is more likely to be a larger loss in terms of ROI.So I would realize a better ROI (because of the higher delta) with less ITM calls rather than more OTM calls.
See that's what I originally thought spindr0, and appreciate another side to the story. It is more of a risk but more of a payout.
May I ask, why did the IV go up?
And what causes the IV to go up or down? I will do some research on my own but any help would be great. The volume on Aapl was considerably lower today so I don't understand how it went up. Is the IV lagging? Meaning that it follows the day before?
This forum has some very knowledgeable traders on it.
May I ask, why did the IV go up?
And what causes the IV to go up or down? I will do some research on my own but any help would be great. The volume on Aapl was considerably lower today so I don't understand how it went up. Is the IV lagging? Meaning that it follows the day before?
This forum has some very knowledgeable traders on it.