Monday, September 28, 2015

AAPL Update #32 (Stock Purchase)

Sep 29

Analysis

AAPL closed down 2.28 at 112.44. The existing hedges are expiring this week. In particular, the short Oct 2' 115 Call is down to about 0.69 in value.  The gain on this short call is 777.

The long put strike is still far away from and has not gained in value and looks like it will expire worthless at the end of this week.

I am going to try an aggressive move of rolling the short call down 2 strikes in this weeks' expiration cycle. I will be keeping the short put at the same strike.

By rolling down the call, I can capture some value and purchase more stock. The risk is that if the stock should rebound sharply this week, I will need to roll up and out in time quickly and re-hedge the position. On a -2.28pt drop in the stock, I am going to try and recover about 38% of that loss.

The overall is market is acting weak, and I do not expect much of move upward or downward and that AAPL will be in a range over the short term.

Trades

Part 1 - Roll down the hedge
+7c Oct 2' 115 Call @ 0.68
-7c Oct 2' 113 Call @ 1.54
Net Credit: 0.86/c

Purchase more stock from the proceeds above.

+5shrs AAPL X 112.92 = 562.20

Total shares in the account is +726. The breakeven on the position is now 107.78 (Original debit 78252 / +726)

-End