Bookmark and Share Weekly Apple (AAPL) Trade December 17

If you followed the Dec 5 AAPL covered call trade you ended up not being called out because AAPL finished below the lowest suggested strike of 535. You ended up owning AAPL at one of these net debits (stock price minus call premium received):

On Dec 5 you bought AAPL at 551.57 and have since written 2 weekly options, collecting this much premium:

Strike Premium Collected
(2 calls sold in 2 wks)
Current Net Debit
535 19.50 + 13.00 519.07
540 15.60 + 10.15 525.82

All of those expired out of the money. This morning we have a little bounce and it's time to write new options.

Annualized Return Of 36% to 50%

As we write this (during market hours), AAPL is at 516.22, up 6.43 for the day. We're going to roll down the strikes this week, but still leave ourselves with a respectable gain if called. If you previously wrote the 535's then we suggest selling the 525's today, and if you previously wrote the 540's then write the 530's today. This is a 10 point drop in strike, but the premiums we've collected to date more than make up for it.

New options to sell, and updated returns:

Strike Call Bid Adjusted
Net Debit
Annualized Return
for 17 day trade
525 6.10 512.97 50%
530 4.45 521.37 36%

If AAPL stays above the strike you choose by this Friday then your stock will be called away and you make the Annualized Return shown over a 17 day period.

If you are not assigned on Friday (i.e. AAPL is below the strike you choose) then you own AAPL at the adjusted net debit shown and can write another option for the next cycle. Your adjusted cost basis (i.e. break even point) is the Adjusted Net Debit.

Mike Scanlin is the founder of Born To Sell and has been writing covered calls for a long time.

Free Trial | Covered Call Newsletter | Covered Call Blog Bookmark and Share