So after a few days of mulling a crazy idea I had in my head I pulled the trigger.
I bought 1000 shares of APPLE and even worse I bought it on MARGIN !!!!
Yes I am bananas! The trader in me has been itching. Yes I am my own worst nightmare.
But wait! Dont I already have 600 shares of Apple?? Why yes I do and it is nestled in my retirement account.
SO what am I gonna do with 1000 more shares? Write short term out of the money calls until it hits at a profit. Isnt this quite risky? Yes it is. Stock could tank and I take a beating.
So on a sunny August 5 of 2014 midday I bought up 1000 shares at 94.86 in my taxable account on margin. I then wrote an August 22th strike call at $99 call for .52 cents on all 1000 shares giving me back basically $500. Also purchasing these shares I squeak in and steal this quarters dividend with the ex-dividend date only being 2 days away. Those 47 cent per share dividends will give me another $470 as well.
I am hoping by writing these short term calls that the strike price will eventually hit in 2014 giving me a quick 5% gain and thus closing my position. If shares don't strike I plan on writing more covered calls 5% over my purchase price until they do. I think for sure Apple shares will reach $100 at some point this year easily so that is why I am making this BOLD move.
Apple will be releasing a much anticipated iPhone 6 model equipped with a larger 4.7 inch screen and various other enhancements. It is poised to be the best selling iPhone yet and on top of that their global reach into new markets has continued to expand. Also rumors of an even larger iPhone 5.5 inch have surfaced as well as a new product of an iWatch of some sorts. Overall its an exciting time for Apple and many analysts have Apple rated as a strong buy with a value like 15 p/e ratio right now.
I dont advocate anyone make this type of move. You guys can watch me fail or watch me win on it. Yes its a risky move but I dont mind the risk really.
In fact in 2007 I made a similar type but even more crazy risky move. I bought over 10,000 shares of Nintendo at $33 and held on and watched it go up towards $80 and then me finally selling a year later at around $55. Learned a lot there. Have and exit point and stick by it! Also don't put all your eggs in one basket. So Thats my plan with APPLE and writing options see I tend to the exit plan.
This entirely doesn't fit with the get rich slowly principal of dividend investing. I have decided not to touch my dividend portfolio to do this and I am treating this trade separately than my regular portfolio. I am even treating it separately to my other 600 Shares of Apple in my retirement portfolio In which I have more of a long term outlook for.
I want to be held accountable for my trades and me putting it on here acknowledges it.
So how crazy am I?
Put me on Blast for my actions! I deserve it!