It’s 2 years since I wrote Betting on Apple at 9 to 2. My bet was that Apple would recover past $600, and in fact, $742 was the close at the options’ expiration. Looking at the trade I made, it couldn’t have gone much better.
Let’s look and see if I might have chosen a better payoff. In this case, $2200 turned into $10000. Had I just bought the calls, the $500 strike for $46.50, the strike would have closed at a value of $242, a gain of 420% vs the 354% gain I saw. The position I entered needed a 35% rise in Apple to get this gain vs 66% gain required to get that 420% return on just buying the $500 strike.
In hindsight, this is one of those rare trades where the only thing I might have done differently was to place a larger position. Most other option trading I do does not yield these results. To be really clear, I am in my 50s and this will go down as one of my top ten option trades, both from a risk/reward standpoint as well as absolute dollars returned.