Keeping my options open ... literally.
I've used the recent weakness to establish my long-term position in 2001 $30 leaps. The nature of these instruments encourages long-term thinking. My expectation is that, near-mid term market weakness notwithstanding, I expect AAPL stock to reach $60 by expiration. Also, since the principal values of these instruments is not "intrinsic" but "time", they are considerably *less* volatile than shorter-term options or even the stock itself. Ie; easier to hold in a downturn.
I *had* expected to hold my 1999 $20 calls and exercise a portion with funds from those I sold, but, with the purchase of the 2001s, I can now sell them all. The thing about these deep-in-the-money calls is that they are geared 2-to-1 as AAPL stock so they're twice as volatile. And with their appreciation (average purchase was when AAPL was in the mid-teens), they're kind of whipping my portfolio around (1 7/8 drop on Friday!) Yikes!
Still I hate to sell them now because I already paid for the time value and, since my 6 month assessment is that Apple stock will still make progress even in market headwind*, I'll try to enjoy the leveraged "sweet spot".
*My best case for the market is that Japan will begin to chip away at its monstrous bad debt problem and hold its market steady; that emerging economies will get no worse and their markets may even appreciate as they anticipate a 1999 and 2000 turnaround; that Europe will finish the year somewhat up from now and that the US market will rotate away from big-caps to small and mid-size companies -- like AAPL! |
