It had to happen. After closing 13 successful trades in a row (Last one in Continental Airlines - CAL) I had a decision point - should I let the put options in Apple Computer (AAPL) be assigned or buy them back with near zero return.
What a dilemma!
I opened this trade in Apple Computer roughly 10 days ago by selling put options with Dec 2006 expiration date. The strike price was $90. Given that this is a retirement account I used cash secured puts. So had to put down $18,000 for 2 put options.
My first choices was to buy back put options and at certain times during last week I would have made a small profit. For all practical purposes this would have been a zero return on investment or a small loss.
The second choice was to let these put options be assigned. My cost per share is $88.83. Given that AAPL closed at $87.72 the paper loss is $1.11 per share.
I took second choice and let the puts be assigned. I am very very positive on Apple Computer and would rather take a paper loss. Also it opens up more investment options. More on it shortly in another post.
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5 comments:
Why go with a put option if you feel strongly about Apple? Why not a call for March or something? You're banking on the stock going down short term?
Good luck trading!
Sorry, I now see that you sold the puts... Well, I hope you get some good action soon.
I think the leaps look good. I have purchased jan 08 calls strike 100. Earnings on Jan. 18 should be stellar.
What brokerage house allows you sell put options? I thought you could only sell covered call options with a retirement account.
jaz.
I use fidelity. However, in my research for brokers found that many of them allow writing puts.
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