Should I panic about my short position on Apple calls?

Quote from stevebearman:

I thought I was playing it safe when I sold 90 Feb. 2012 Apple calls at 470 strike price. Apple announced earnings today, and its stock rose from 420 to 450 in after hours trading. What are the possible approaches?

If I want to speak with an expert and get their advice, who would you recommend? How do I even find people to talk to online?

Thanks in advance!
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I am the expert you seek. Let those calls expire worthless and the premium you collected is ALL yours, just hang in there till expiry. They are $20.00 OTM and I don't think AAPL will trade that high.

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Quote from bwolinsky:

Whatever. The potential for infinite loss should be a deterrent anytime the strike is within 20% of the underlying.
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You're absolutely right... infinite loss is a scary thing. I'd be far more fearful of 100 short shares of AAPL going from 450 to INFINITY than 100 long shares going from 450 to ZERO.

BTW, can you name any stocks that have gone to infinity ??
 
Quote from diablo11:

How long ago did this feel "toppy" that could have been said for the last hundreds of dollars of move.
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True statement...but he only needs a few weeks, right?! (Though it won't take a lot for AAPL to trade through the 470 area, it gapped up to 469'ish on the eranings report). And the stock is indeed in a upward channel...

GL to him/her...
 
The questionable wisdom of selling a naked call notwithstanding and as much as it pains me, I am going to agree with FF on this one. Do nothing. Hold the calls. They will expire worthless. Or you will lose your ass. Anyone with the nads to make a trade like this surely has the resources to cover it.
 
Quote from probe1957:

The questionable wisdom of selling a naked call notwithstanding and as much as it pains me, I am going to agree with FF on this one. Do nothing. Hold the calls. They will expire worthless. Or you will lose your ass. Anyone with the nads to make a trade like this surely has the resources to cover it.
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This logic is how some large trading firms got destroyed by renegade traders. They see the cheap prices of options and think its free money, when in actual fact the price represents a real estimate of a long shot event occurring in a short time frame.

In the case of AAPL and earnings, its not even a huge long shot, I think the market underpriced the chance. In fact, someone buying those calls could easily have made between 600% and 1000% return overnight.

I looked at the "trade" ( 95% chance the poster is phony ), and at close he had a chance to get out at a $13,000 loss after hitting a higher loss earlier in the day. Assuming no margin call forces the issue, losing $13,000 when quite conceivably you could lose $300,000 on any decent trend up is the right strategy. There is no way risking $300,000 to save $16,000 is a smart decision.
 
Quote from Nine_Ender:

This logic is how some large trading firms got destroyed by renegade traders. They see the cheap prices of options and think its free money, when in actual fact the price represents a real estimate of a long shot event occurring in a short time frame.

In the case of AAPL and earnings, its not even a huge long shot, I think the market underpriced the chance. In fact, someone buying those calls could easily have made between 600% and 1000% return overnight.

I looked at the "trade" ( 95% chance the poster is phony ), and at close he had a chance to get out at a $13,000 loss after hitting a higher loss earlier in the day. Assuming no margin call forces the issue, losing $13,000 when quite conceivably you could lose $300,000 on any decent trend up is the right strategy. There is no way risking $300,000 to save $16,000 is a smart decision.
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Totally agree...small loss...basically nothing vs. potential for several hundred K's...

Option traders: Could he buy calls (strike at 475/500), and get out even if stocks ramp to 475+ by expiration? Or will it cost a lot more than just get out now, for less than 20K loss?

If AAPL trades below the 443.73 area, sure could get a strong downdraft...but it could also get a huge bounce here...
 
Quote from spindr0:

You're absolutely right... infinite loss is a scary thing. I'd be far more fearful of 100 short shares of AAPL going from 450 to INFINITY than 100 long shares going from 450 to ZERO.
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You think THAT'S scary? What if AAPL goes to infinity and BEYOND???
 
What if beyond infinity is a black hole??
We'll all be sucked in along with our portfolios.
It'll be like the blind leading the blind!!!
OMG, OMG, the sky is falling!
 
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