Stock options and taxes? (first time dabbler)

[KTP]

Nobody exercises calls to get the actual stock. They enter a sell to close order on the call, book the profits, and either purchase a new call for later in the year or move on to another investment.

Right now you have a gain of almost 100%...why be greedy? Just exercise the call today and bank the profit. If you want a little skin in the game, buy a April $460 call for $1200, or buy 4 or 5 shares of stock with your profit.

Personally, I would consider a call spread if you think Apple will eventually hit $500 before 2013. I would buy Jan 2013 $490 calls for $2860 and sell short Jan 2013 $500 calls for $2580. Each one of these "spreads" will cost you $280 and would be worth $1000 if Apple is above $500 by 2013. That is a profit of $720 before commisions, or 257% profit. Maybe a more advanced trade than you are used to, but worth investigating.

Do your own research and don't depend on advice from the web. Good luck!

[Nika]

Well, the update is -- I exercised! So now I'm all in!

We'll see what happens.

DH estimates 40-41 billion for apple earnings. But of course, who knows. We'll see.

[kv968]

Well, the update is -- I exercised! So now I'm all in!

We'll see what happens.

DH estimates 40-41 billion for apple earnings. But of course, who knows. We'll see.

I think I would have taken advantage of the rising implied volatility and sold the option before it expired although the recent fall would have hurt the option price. However if you sold it back when you posted the last question you could have booked a 79% profit. I'd take that over owning the stock at $403 but who knows?

Are you still planning on selling some before the earnings and holding onto the other shares?

[jpg7n16]

I too would like to know if you're holding all 100 shares through the earnings announcement or just the 30 you plan to keep long term.

Those extra 70 shares represent about a $30k bet on Apple's earnings, so I hope the stock moves in your favor


Just some other thoughts:
-After earnings come out, what is your plan for the additional 70 shares?
-What if lower than expected earnings? When do you get out?
-What if higher than expected? What is your price target?
-Any put options as a little insurance?

Just kinda wondering what the plan is after the announcement. Best of luck!

[Nika]

I don't know. If the stock goes high right before the announcement (like above 435) I might sell like 30 shares.

And hold the other 35-40 shares until after the announcement (otherwise, there was no point in exercising).

I need to sell at min $429 a share to make equal amount of money to what I could have made if I exercised. So anything above that, would be a gain, anything below, a loss.

Besides something like $10-$20 fee I'll pay each time I want to sell stock. (but if I only cell in 1 or 2 batches, I think I can ignore this until it is time for final calculations.

So the main question is, do you believe AAPL will go above $429 either before or after the announcement?

[kv968]

I don't know. If the stock goes high right before the announcement (like above 435) I might sell like 30 shares.

And hold the other 35-40 shares until after the announcement (otherwise, there was no point in exercising).

I need to sell at min $429 a share to make equal amount of money to what I could have made if I exercised. So anything above that, would be a gain, anything below, a loss.

Besides something like $10-$20 fee I'll pay each time I want to sell stock. (but if I only cell in 1 or 2 batches, I think I can ignore this until it is time for final calculations.

So the main question is, do you believe AAPL will go above $429 either before or after the announcement?

I don't think it'll go much above $425-426, if that, before the announcement. Afterwards, it's a crap shoot. The expected earnings are high but I think the "shadow number" some investors are looking for is even higher so if they don't really impress it might be in trouble. On the bright side, the bulk of the new iPhone sales will be in this earnings report but that's also what's driving the earnings expectations higher. It'll be interesting...Good luck.

[Nika]

YEEEEEEEEEEEEEEES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!

[jpg7n16]

YEEEEEEEEEEEEEEES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!

I def thought of you today when I heard the Apple announcement

[fe2o3ez]

Me too. I was reading this thread yesterday afternoon, and listened to the recap of the announcements on my way home last night. How nervous (then excited) were you?!

Welcome to the world of options!

[Nika]

I was really excited yesterday, dancing around.
However, we did not do as well selling it today -- we did not manage to sell at the maximum.

I thought it would go as high as it did in pre-trading and missed the first few minutes of the high. Did not know it would go that much lower.

So at the end we sold at $447. Still, we made $18 more per share than if we had sold the option.

I guess with $403 for cost basis I should still be very happy. But I am just happy.