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Weekly Apple (AAPL) Trade June 11
Our track record is 18 out of 18 successful weekly trades in Apple (AAPL) since Apr 16, 2012 (see prior blog postings).
Today was the first day of the Apple Worldwide Developer's Conference, where Tim Cook announced a few new products. Despite the must-have nature of the new MacBook Pro, AAPL shares declined 1.6% to 571.60, falling in line with the NASDAQ's overall drop of 1.7%.
Now that the market has closed, we are suggesting a 4-day AAPL weekly in-the-money covered call, to be opened tomorrow morning.
Annualized Return of 42.6%
Buy AAPL at 571.60 and write this covered call:
| Strike | Call Bid | Net Debit | Absolute Return |
Annualized Return for 5 day trade |
|---|---|---|---|---|
| 560 | 14.20 | 557.40 | 0.47% | 42.6% |
If AAPL stays above 560 by this Friday then your stock will be called away and you make the Annualized Return shown over a 4 day period.
If you are not assigned on Friday (i.e. AAPL is below 560) then you own AAPL at the net debit shown and can write another option for the next cycle. Your cost basis (i.e. break even point) is the Net Debit.
June 16, 2012: Post-expiration followup... AAPL closed at 574.13 on the last day of trading for the above option. The strike shown (560) finished in the money, was called, and the Annualized Return shown above was realized.
Mike Scanlin is the founder of Born To Sell and has been writing covered calls for a long time.