“It feels good to be the king. Who could possibly blame someone who bought Apple (AAPL) ____ (insert any date you wish here) for feeling like they are king or queen of the world. Clearly you are smarter than the person who sold you the shares, there can be no question about it. It’s one of the human emotions that really have no equal, the euphoric feeling of money and wealth piling up endless for no more reason than you figured out how to open the golden treasure chest,” Robert Weinstein writes for Seeking Alpha.
“If emotion doesn’t dictate your buying and selling choices and you believe Apple may be nearing a top, but are not quite sure how to time it in this market you do have another choice in your exit strategy. One of the strategies I employ for my longer term exits (as well as entries) is the use of options,” Weinstein writes. “With the use of options, investors are able to exit part or all of a position without having to time the sale right down to the minute. For example, with Apple currently trading around $578 a share after the recent move higher in price you would feel comfortable selling in this current price range, but not sure because you’re thinking you might be leaving money on the table. One method of exiting a position and squeezing out a little extra income is by selling an in the money call option against some or all of your shares. Remember when entering or exiting, you generally do not have to make an ‘all or nothing’ move. Typically when I enter or exit a position I will scale in and out as I do not try to pick tops and bottoms right on the nose.”
Read more in the full article here.