Options Strategies to Take Advantge of Apple's Volatility

Here’s Apple again.  This time it’s not about it’s steady rise up, it’s about the volatility seen in the stock lately.  The current state of the stock calls for different strategies than we’ve discussed in the past for Apple.  In the following article, Seeking Alpha’s contributing author, Paul Zimbardo, closely examines the health of Apple and lays out three possible scenarios for their immediate future as well as different option trading strategies to use with each.

Where do you think Apple is headed?  Leave a comment below and let us know.

Apple (AAPL) has experienced an extremely volatile 2012 with five percent price swings becoming the modus operandi rather than the exception. I have recommended option strategies on Apple since 2010 with positive results (remember past performance is not indicative of future results). For reference, please view the first and other articles in the series to fully understand the strategy and its strong potential returns. This strategy is oriented towards long term investors with the objective of simultaneously generating income and reducing your effective cost basis in the underlying stock. In essence the investment objective is to capitalize on Apple’s volatility by selling out-of-the-money options to generate weekly income without sacrificing long-term returns. I perform a weekly analysis of Apple’s stock, options, recent news, and competitive analysis. Even if you have no plans to engage in the options market this is your one-stop primer for the critical Apple developments from the past week.

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(Source: Yahoo Finance)

Apple finished yet another erratic week in which it oscillated between 560 and 574 showing some resiliency at the 560 level. As opposed to last week when Apple declined $32, there was a preponderance of optimistic Apple news this week. The two main stories this week related to Apple reducing its dependency on Google and more details of the new iTV being “confirmed”. Apple and Google have historically been close partners but signs of the relationship straining are clearly evident. The most obvious occurred in August 2009 when

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