I am recommending we roll our Apple (AAPL) call out two weeks to generate more income and reduce our cost basis on the position.
Given that the company is expected to report earnings on Oct. 26, I am recommending we use the cash we generate to offset the purchase of a protective put. Note that this is purely a defensive position. The goal is for the put to expire worthless. However, in the event the stock sells off sharply, this put could be very profitable.
Current Stock Price: $145.06
Cost Basis: $156.52 (The cost basis was incorrectly listed as $156.50 in the previous alert.)
Action:
- Buy to close the AAPL Oct Monthly (10/21) 145 Call for around $1.53
- Sell to open the AAPL Nov Week One (11/4) 145 Call for around $5.30
- Set initial credit limit at $3.77, but adjust as needed to roll today
- Buy to open the AAPL Oct Week Four (10/28) 140 Put for around $2.64, but adjust as needed to roll today
New Cost Basis: $155.39