I owned this stock in my long-term account in 2012 but had exited the final piece in mid-Nov (Option Collar, Put side). After a continued drift down since and now testing an important level at $425 I have elected to initiate a new long position:
My main motivation for entering here is that I want to participate in the expected Rally that will occur once $AAPL finally puts out a plan to utilize more of the cash on the balance sheet (over $137 Billion). However, to protect long positions I prefer to use Option Collars frequently as so have done so in this case.
Here is the breakdown:
- I am long stock at $421.75
- I am short the March 450 Call (so a Covered Call)
- I am long the March 420 Put
- The 2 Collar pieces cost me $6.50 (Put was very near ITM so the cost was high)
On any significant up move to near the $450 level, my gain is capped at $443.50. On any down move through $420, the long Put will be ITM and protect to the downside.
This Collar is good until next Friday expiration so for now I can just let it ride.
ITM = In the Money