Wednesday, June 10, 2015

AAPL Update #10

Jun 10

Analysis

After the recent downward swing, the overall markets rallied hard the last couple of days. AAPL closed today at 128.88, up 3 dollars since trading out the hedges.

With expiration in just over two weeks, the current 124 - 128 collar is reaching is maximum value.

Here are some adjustment possibilities:

(1) Wait until expiration. As in the Jun 5 expiration cycle, waiting until expiration day pulls out all the time premium so buying back short call is all intrinsic value. And if the stock has not moved too far above the short strike, I can attempt to reset the collar again for even money.

(2) Roll up the long put about 2 strikes from 124 to 126. This can be done today for 0.40 debit and protects the 2.00 pt gain. The synthetic vertical spread would be 126 - 128.

(2) Look at rolling the collar up and out in time. This is difficult to do without adding money due to the time premium as there is still more than 2 weeks left in the current contracts.

I will continue to wait and watch the price action over the next week. If the stock rallied 3pts in two days, it can fall 2pts or more in the next two weeks.

Value

Assuming the stock price can close above 128 at expiration and I do nothing, the expected value of the position will be:

+600 shares X 128 = 76 800
+53 shares X 128+ = 6 784+

Total position value = 83584+


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