08-08-2011, 05:55 PM
Well, you are a braver man than me to buy that right now. 
But if the market bounces back, you could make out like a champ.
However, bear in mind a $11.85 call actually costs $1185. And if you hold it to expiration, and the stock is below $375 at that time, you will lose your entire stake. At that point the stock would have to be above $386.85 (the cost of the option plus the strike price) for you to make a profit (not counting commission).
Now...if the stock went up before then, the value of the option would go up as well, and you could sell for a profit (if you were nimble). But if Apple dropped another $20 the day after you bought it, you'd probably be in trouble.
Most of my Apple option spreads expire Jan 2012, so I'm hoping for the market to bounce back by then. If it doesn't...this will NOT be a good year for my portfolio.
I do think Apple is a steal at this price, though.
Man, what a week it's been. Never thought we'd see all this again so soon after 2008.
But if the market bounces back, you could make out like a champ.However, bear in mind a $11.85 call actually costs $1185. And if you hold it to expiration, and the stock is below $375 at that time, you will lose your entire stake. At that point the stock would have to be above $386.85 (the cost of the option plus the strike price) for you to make a profit (not counting commission).
Now...if the stock went up before then, the value of the option would go up as well, and you could sell for a profit (if you were nimble). But if Apple dropped another $20 the day after you bought it, you'd probably be in trouble.
Most of my Apple option spreads expire Jan 2012, so I'm hoping for the market to bounce back by then. If it doesn't...this will NOT be a good year for my portfolio.
I do think Apple is a steal at this price, though.Man, what a week it's been. Never thought we'd see all this again so soon after 2008.
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Currently PvPing in the stock market