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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: kelseysuncle who wrote (5192)4/30/2013 12:36:24 PM
From: Uncle Frank1 Recommendation  Read Replies (1) of 5205
 
I sold two contracts at $18.40 backed by cash. On that cash if AAPL stays above $420 I earn 4.38% in just 6 weeks. If AAPL tanks I will own 200 shares at a cost basis of $401.6. I'm convinced that AAPL has gone about as low in valuation as its going to go. And their product cycle is is about to turn with new iPhones etc coming out. Either way for me its a win. Either a good short term return or I will own a stock that I really don't mind holding for a while at a price I think is reasonable. I could very well be wrong but I like this trade.
You called it, Uncle. Did the stock get put to you?

I played it as a covered call, buying AAPL at 423, and writing the 4/26 $435 call for 12.35. The call expired worthless, and I retain the stock at an adjusted cost of 410.65. I'm itching to write a 5/18 call, but will wait for the stock to stop running.
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