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Weekly Apple (AAPL) Trade June 28
Our track record is 19 out of 19 successful weekly trades in Apple (AAPL) since Apr 16, 2012 (see prior blog postings).
Today the supreme court upheld Obamacare's insurance rule. Combined with nothing positive coming out of Europe, the market is down 160 points, and AAPL is down 5.17 to 569.33. Nothing has changed for AAPL today and we remain bullish. We are suggesting an 8-day AAPL weekly in-the-money covered call to take advantage of today's dip.
Annualized Return of 17% to 38%
Buy AAPL at 569.33 and write one of these covered calls:
| Strike | Call Bid | Net Debit | Absolute Return |
Annualized Return for 5 day trade |
|---|---|---|---|---|
| 555 | 16.40 | 552.93 | 0.37% | 17.1% |
| 560 | 12.55 | 556.78 | 0.58% | 26.4% |
| 565 | 9.05 | 560.28 | 0.84% | 38.4% |
If AAPL stays above the strike you choose by next Friday then your stock will be called away and you make the Annualized Return shown over an 8 day period.
If you are not assigned next Friday (i.e. AAPL is below the strike you choose) 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.
July 6, 2012: Post-expiration followup... AAPL closed at 605.88 on the last day of trading for the above options. The strikes shown all finished in the money, were called, and the Annualized Returns shown above were realized.
Mike Scanlin is the founder of Born To Sell and has been writing covered calls for a long time.