“As options’ popularity has grown among retail traders over the last decade, the exchanges have responded with more products. Weekly options, introduced in 2005, have gained to the point that the top options-centric online brokers report that they comprise almost half of their options volume this year,” Theresa W. Carey reports for Barron’s. “Most expect weekly options to pass regular monthly options in volume this year.”
“On March 18, the exchanges will introduce mini-options on three high-priced active stocks and two exchange-traded funds: Apple (ticker: AAPL), Google (GOOG), Amazon (AMZN), SPDR S&P 500 ETF Trust (SPY) and SPDR Gold ETF (GLD),” Carey reports. “All of these equities are priced well over $100 per share, which makes it tough for most retail investors to buy them in 100-share blocks. The new mini-options will make them more affordable—representing just 10 shares of stock.”
Carey reports, “Under the traditional 100-share terms, near-the-money April calls for Apple, for example, are in the $15-$20 range for a contract, so a single call option could set you back about $2,000. If you were to write a covered call — buying 100 shares of Apple and selling the April 440 strike — you’d be looking at a price tag of over $42,000. Investors could wait for a stock split or two to make these pricey stocks easier to buy, but they’d have to wait a long time. So to keep the little guy involved, mini-options are coming.”
Read more in the full article here.
“According to a Bloomberg article on May 9, 2012, 77 percent of executed trades in AAPL by TD Ameritrade customers have been odd lots (less than 100 shares),” Bryan Wiener reports for Benzinga. “The new mini options provide both the ability to trade expensive deep in-the-money options to take advantage of an underlying move in any of these names and a new hedging vehicle for a less-than-100-share position.”
“What is unknown as of this article is the exchange fee that will be applied to each contract,” Wiener reports. “The ISE has stated that it would provide its mini option fee structure some time before trading commences. The fair assumption is that the fee for each contract will be 1/10th of the standard option contract, but given that the exchanges’ capacity requirements for quotes has effectively doubled, the fee might not be simply divisible by ten.”
Wiener reports, “This could be a big coup for the exchanges if the fee structure is not significantly different on a per-contract basis than for standard option contracts as there may be an explosion in option volume in these mini contracts given the significant amount of odd-lot equity transactions that exist today. The exchanges’ quarterly earnings may have gained some optionality with this upcoming product introduction.”
Read more in the full article here.
“The potential impact on retail investors is very large if you assume – and I do – that over time more and more stocks and ETFs will have mini-options,” Michael Shulman writes for InvestorPlace.
“More importantly for options sellers, the volatility of these large stocks will filter down to the mini-options. And Amazon, Apple and Google are relatively volatile stocks with options that carry fat premiums on their calls and puts,” Shulman writes. “Sell puts on these names every week or every month and you can generate yields between 15% and 25% per year, something that would not have been available to the typical account before the creation of these mini-options.”
Shulman writes, “What should you do right now? Nothing – except contact your broker to see if and when they are reducing commissions on mini-options trades. You may also want to become familiar with these five stocks and ETFs. The impact of the mini-options on stock and options prices is a true unknown. I do expect volume and volatility to go up and the selling of puts and covered calls to be more lucrative as soon as mini-options become available.”
Read more in the full article here.
yeah, whatever.
Great just what we need – another way for Apple stock to be messed around with.
There’s no end to the madness.
e-mail Apple and demand investor support. I just did again.
This is what I sent:
“Ok, in 2 weeks on March 18th, mini-options trading in Apple launches. That opens the gates for even more traders to continue the decimation of the AAPL stock value. And again, as investors, we are lined up to be slaughtered and Apple watches. More than a billion being put in the bank every week and with what will be more than $150 billion being reported next quarter, NOTHING is being done. Apple will not invest in Apple. Only the investors are left to be crushed.”
It is time for Apple and the board to do their job as a publicly traded company. When they went public they took on responsibilities and obligations to their investors. It is time to leave the coliseum seats and go help fight the bears!
This is great. I want an optional Blue-ray player and Airplay…..
What?
A stock split makes a whole lot more sense, and this is exactly why I’ve been arguing for one. I haven’t dealt in AAPL options since this time last year because it’s just too expensive to do so with money that has to be counted as lost from day one.
Wouldn’t touch any of this ‘Wall Street Sucker Bait’ with a barge pole!
Just another way to take money from the little guy. Especially the little guy who thinks he knows what he is doing and thinks he has an equal chance.
Just another way to take money from the retail investor, especially with the gross manipulation of Apple related to options trading and option open interest. 10 for 1 split would significantly hamper profitability of machine trading bots due to reduced spreads. Would also reduce opportunities in option by reducing spreads.
“So to keep the little guy involved, mini-options are coming.”
Translation: “So to keep fleecing the little guy, …”
Shares,options,mini options,ETF’s,mutual funds are just tools. If you don’t know when to sell, you can lose money no matter which method you use. If you think you can buy a company’s stock and hold it forever you simply don’t know how to invest. Nothing goes up forever. Not even Apple. You don’t buy shares in a company and then stick them under your bed and forget about them. Well okay, some people have done this. But those are the fools who have lost so much money. And it doesn’t matter what your purchase price was, you have still lost money in the last five months. Big time money. That’s reality. Right? You damn right it is! Just like everything else in life you have to have a commonsense approach. You need a plan. Without a plan you are doomed. Without discipline in anything you are doomed to failure. Basic investing requires that you try to make money on anything you invest in. The stock market is no exception. The stock market looks great when Apple goes from $300-$700. It’s so easy. Even though that’s not normal who cares? “I’m going to ride this baby to $1000.” That’s called greed. That’s called not understanding the stock market. Although any rational human being can understand that nothing is supposed to appreciate that much that fast. But hey, as long as it’s going up people have their blinders on. They have no plan, they have no discipline. Then when the shit hits the fan and reality sets in to the stock market, Apple starts dropping. Then the folks with the blinders on freeze. They don’t know what else to do besides bitch so they start blaming everyone and everything around them. It’s a scheme, it’s a plot, it’s a conspiracy. It’s the shadow people! A simple investing plan and discipline would have kept them on top. But it’s much easier to blame others. Next time you’re up appreciably learn to take your profit. Quit being so fucking stupid and greedy. If you think you can buy and hold forever, you can. And this is what you get. When you don’t learn to take your profit at appropriate times this is exactly what you get. Have a plan. Have discipline. Do your due diligence in investing. Stocks go up. Stocks go down. It happens to all of them. Even Apple. I would suggest mutual funds but you have to learn to use the basic investing tools of buy low and sell high there also. Try passbook savings. With compound interest working for you it can be a no-brainer. Just don’t lose your passbook.
Apple’s sales weren’t supposed to go up that fast either — they did.
Apple’s revenue wasn’t supposed to go up that fast either — it did.
Apple’s profit wasn’t supposed to go up that fast either — it did.
Apple’s cash pile wasn’t supposed to go up that fast either — it did.
So Apple’s shares have hit a bump instead of following the realities of the business. The market is chasing its tail, and not reflecting the fundamentals of the company.
So I’m using this opportunity to buy more. Why are shares the one thing people don’t seem to want to buy when it goes on sale?
While this is true Ina general sense, Apple has still been going through considerable price compression. The rest of the S&P is valued twice as much as Apple. The hedgies just pissed that they aren’t getting more dividends or any preferred shares. The thing is Apple is getting too big to be pushed around. Even with a few years of no growth, Apple will have enough money to buy JP Morgan and Bank of America. There’s no limit to what you can do with that kind of money. Become a bank, large infrastructure projects, space projects, bio and energy research, etc. This is the flailing of the powerful that we’re witnessing.
If Apple had a larger iPhone and a more affordable iPhone for the emerging markets right now………………the stock would be doing just fine. You can blame everyone else if you want to. Why not? There are so many whiners on this site that do that daily. But I just gave you the facts. Live with it.
Often people confuse opinions with facts!
If Apple had shipped the new iMac in October the stock would be doing fine.
AAPL should be doing fine regardless, simply on the fundamentals.
iMac sales are fundamentals! Do you know anything about valuing a company?
Yes. And the lack of the new iMac in the christmas season was not even close to impacting the fundamentals of the company in any significant a way.
So, on the fundamentals as they are today, AAPL is so grossly under-valued that we’ve never seen anything like this. It’s inexplicable except for herd mentality.
Options trading = gambling. Plain and simple. Gambling with our economy. Gambling with people’s retirement. It should be outlawed.