Is It Time For Covered Calls On AAPL?

Jul 19 • Finance • 353 Views • Comments Off on Is It Time For Covered Calls On AAPL?

Although the Apple Inc.’s stock ticker has been on the rise since 2008, many investors are still wondering whether investing they money in AAPL represents a truly great idea or not. If you are interested in getting a straight answer that relates to this issue, the very first thing that you should know about Apple covered calls is that, similar to any other covered call options, they also represent specific options that are sold against indexes, EFTs, and stocks.

Bus, besides the explanation that defines Apple covered call options, any investor should also know that the transactions, which correspond to these types of options, come along with a variety of advantages and disadvantages. In order to help you to take a documented decision with regard to investing your money in Apple covered call options, the following paragraphs present specific details that you should absolutely check.

Know the Advantages and Disadvantages of Apple Covered Call Options

Similar to many other profitable covered call options, the ones that belong to Apple indicate a series of advantages, such as:

  • Protection: None can deny the fact that these days, Apple covered call options provide a great protection. For instance, it is essential to know that for a stock of Apple, which costs $570 and brings along a premium of $21 for selling it for the amount of $575, the effective cost will be of $550. If the investor can sell the stock for $575, it is like selling the respective stock for $591 ($570+$21). This exemplifies the protection that you can get by simply opting for AAPL stocks. 
  • High Volatility: The fact that AAPL presents a high volatility can help you to benefit from a great advantage. This is because high volatility can lead to elevated option pricing. Obviously, this thing is great especially in case that Apple misses and its stocks sell off. Additionally, it is essential to know that the trade permits upside price movement, which means that an investor can literally get great profit margins by simply trading Apple covered call options.
  • Great Potential Return: Considering the aforementioned point, most analysts admit that AAPL ensures a great potential return. Lately, the experts have issued a report that underlines the fact that AAPL is defined by a few limits, from which the most important ones are the max risk of 7.8% and max return of 4.1 for this month (57.6% annualized). These figures clearly show that Apple has already won the battle for market capitalization.

Although the aforementioned points clearly show that choosing Apple options represents one of the best covered call strategies that an investor can opt for, there are a few drawbacks that you should know about. These drawbacks relate to the risk factor (7.8%), which actually means that investing your money in AAPL does not guarantee a risk-free transaction.

Additionally, creating the perfect strategy based on movement of Apple stocks depends on the knowledge and skills of the investor. In short, investing money in Apple covered call options does not offer any protection from the regular pitfalls that are associated with this market segment. By simply analyzing the aforementioned advantages and disadvantages, everyone can observe that investing in AAPL is a truly wise decision.

Discover the Reasons behind Apples Success

The great advantages that an investor can get by simply trading specific Apple covered call options can only be associated with the financial results of this company. For instance, Apple posted $108 billion revenue in 2011, exceeding the revenue of some other technology giants, such as Microsoft and Google. These days, everyone knows that iPod, iPad, and iPhone are not product names anymore but generic terms that people use whenever they refer to particular categories of products.

Additionally, Apple sells thousands of hardware and software solutions for PCs, laptops, and mobiles together with specific computing systems that provide support for all these solutions. Lately, Apple has launched iCloud, which invites people to use the latest storage technology. Undoubtedly, Apple is the only company that succeeds to lead the high-tech market with feature-rich and innovative products and services, which are definitely very easy to integrate in almost any system. With such a portfolio, there is no wonder that AAPL index places Apple on the first position among the companies that are currently struggling to climb to the top of the stock market. Considering all these, you can conclude that creating a sustainable covered call strategy on AAPL is definitely a positive thing.

This is a guest post by Charlie Oszvald occasional guest blogger on covered calls and full time on personal investments. Charlie currently represents Compound Stock Earnings one of the market leader’s of the covered call industry, 

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