Monday, March 16, 2015

AAPL Collar - Update #1

Mar 16

Analysis

On Friday, I adjusted the conversion into a wide 13pt collar for May 1 expiration.

Since the stock moved up today close to 2.00, I have a gain on the underlying, a loss on the collar, but a net overall gain in value. The collar is quite wide and does not perfectly hedge the stock delta. This smaller negative delta against the +100 delta of stock is what creates the synthetic equivalent to the call vertical spread.

Value

Monday's P/L

+625 AAPL shares * (124.95 - 123.07) = +1175
- May 1 130 Call (2.95 - 3.20) * 6 = -150
+May 1 130 Put (3.00 - 2.81) * 6 = -114

Net gain: 911

The collar lost 264 in value due to the short call increasing in value and the long put decreasing in value, but the stock gained 1175 from the point at which the position was entered.

The position value is approximately 78 073 + 911 = 78 984

Notice that the stock price is still down over 5 (representing 5 x 600 shrs = $3000 value) from the opening of this collar, but the position is actually up just under $600 compared to the opening value of 78,252.

-End