Hi Murthy,
The reason I did not give exact price is that I did not buy and sell calls as a same order.
$260 call was bought for $1010 few days before I sold May $270 call for $255.
So If I were to close the position, I would make some money but not as much as I would if AAPL closes around 270. Now as Chris said, AAPL can consolidate a little and that will make 270 call go down as premium will decay much faster in next few days.
The reason I don't want to sell July 270 call is I don't have much experience in options and if AAPL keeps going up, it will make me unhappy as July expiration is far away.
In case AAPL goes above 275 then I would rather roll strike up say buy July $270/280 call and sell May $280/290 call to offset some price.
What do you think about this?
Thanks a lot for your replies. No I didn't attend optionetics seminar. They are really expensive for my taste. I did read Options Course though.
Regards,
Vimal
--- In OptionClub@yahoogro
>
> Vimal,
>
> I appreciate your explanation, however you still haven't given the prices at
> which these options were bought/sold.
>
> The reason I was specific on the prices is I wanted to see if there was a
> volatility crush on your July options as the earnings came out recently
> (usually only the front month are most affected, but you see some increase
> on the other months too).
>
> Are you familiar with a roll? To capture the profit, you can roll your May
> 270 call to July 270 - thus making it a vertical. For this, I would need to
> know how much you paid for it in the first place. This roll which involves
> buying your May 270 back and simultaneously selling a July 270 (do it as
> "sell a calendar", in most brokerages) - this would fetch you about $6.77
> right now and locking in a profit. THIS IS JUST ONE option to consider.
>
> You will still hold July 260/270 vertical spread. Whether this makes sense
> or not is determined by what you paid.
>
> If you don't do anything and AAPL closes above 270, then you would have at
> least made $10 (close both sides), which may not be necessarily bad thing.
> Your 260 call would have AT LEAST $10 of intrinsic value - it will have
> extrinsic value too ...
>
> Let me take a wild guess here - did you recently take an Optionetics
> seminar?
>
> Good luck.
>
> Murthy
>
>
>
>
> On Fri, Apr 23, 2010 at 7:46 AM, vimalbpatel@
> vimalbpatel@
>
> > Hi Murthy,
> >
> > My thought process was like this. AAPL was about $255 and I was bullish on
> > it. So I wanted to buy July $260 call and keep it until 30 days to
> > expiration. I wanted to sell it if my loss is 50% before that date.
> >
> > Now $270 was far away and thought I can sell May call to collect some
> > premium. That was going to offset my option price by about 25% and was
> > hoping it would expire wortless or premium will decay in last 30 days.
> >
> > Now AAPL has moved a lot in last two days. Yesterday about $7 and today 4+.
> > I really don't want assignment on this one so I thought I would ask you
> > guys.
> >
> > I am up good amount on my 260 call so one option is to colse the position
> > with profit. Which is never a bad thing.
> >
> > Second option is to close out this position and roll the spread to 270 July
> > vs 280 May. Which will still give me profit.
> >
> > So being in the condition I am in, what you guys will do. As I don't have
> > much experience, I would like to see how you guys would adjust this
> > position.
> >
> > Thanks a lot,
> >
> > Regards, Vimal
> >
> > --- In OptionClub@yahoogro
> > >
> > > Vimal,
> > >
> > > When or more importantly for what price did you buy this (diagonal
> > > calendar)?
> > >
> > > What was your thought process in doing this trade BEFORE you put your
> > hard
> > > earned money into it.
> > >
> > > There is no risk of assignment - too much time value on the 270 calls and
> > > there are no dividends for AAPL.
> > >
> > > Murthy
> > >
> > >
> > >
> > >
> > >
> > > On Fri, Apr 23, 2010 at 6:17 AM, vimalbpatel@ <
> > > vimalbpatel@
> > >
> > > > Hey guys,
> > > >
> > > > Very new to options so here is the problem.
> > > >
> > > > I bought AAPL July $260 call couple of weeks ago and sold $270 May
> > against
> > > > it. Now price is approaching $270.
> > > >
> > > > What would you do right now as AAPL is $269 premarket right now. Would
> > you
> > > > wait two more weeks before you buy back or roll over strike? Or you
> > would
> > > > buy back right now?
> > > >
> > > > Did you get assigned three+ weeks before expiration? Because eventhough
> > > > price is at strike, option is still made of extrinsic value and has yet
> > to
> > > > get any intrinsic value.
> > > >
> > > > Thanks in advance,
> > > >
> > > > Vimal
> > > >
> > > >
> > > >
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