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Hi
Earlier this week, I bought a couple of options on AAPL. Earlier today dividends were announced. so I got this message from IB :
"Dividend-Triggered Option Exercise Advisory"
Basically saying I can exercise and collect dividend. How would you make that call? What factors will make you decide either way. My calls are at BE but with today's action, they should be ITM tomorrow. I only have two more days to expiration. I have two calls and dividends are .77
I am asking because I don't know what to do! This is a first for me.
Thanks,
K
Can you help answer these questions from other members on NexusFi?
That is the primary question here. I do own AAPL. I am also short puts, which is a bullish position.
So, if you are cool owning AAPL at your strike, and you are ITM do the early exercise and collect the dividend if doing so is a beneficial workout. .77 is the calculus as that is what you get in dividends.
How much could you sell next friday same strike calls for. You could collect the dividend and that premium. Where are the same strike same ex puts?
Hi Dan,
I do like Apple as well, but 200 shares would use up all of my capital plus margin. I a little out of the money still, but if I did exercise I can sell the following day. Of course with all the volatility we have this week, I am probably better off getting out of my calls with profit. Assuming, we move up tomorrow!
Thank you very much for the feedback and now I know that I should never buy a stock, just sell the puts until assigned. Seems like a good way to buy at discount, right?
selling puts is a way to participate long, just like buying the calls.
Generally most options are bought by retail and sold by the floor. There are many nuances but I look to sell high implied volatility (high premium) and buy lower implied volatility options.
In a nut shell, if you get a double on your long calls sell half. This position has only two days left so decay (theta) will work against your longs real fast.
You are correct, if your calls go in the money they will move almost lock step with the stock. Still plenty of time to have a big day % wise. BUT if they are not in the money pretty quick you might want to sell them or roll to next week if it's not too expensive.
Hi Dan,
They are doing okay, but since they are out of the money ( 202.5) and expiring tomorrow. Theta is doing its thing. I have a profit limit and, with no new Trump tweets, I should be out with some profit. But not much. I will post my P&L in the Journal, later today.
Again, thanks for all the help. I decided not own Apple, for now.
