Apple [stock_market_widget type=”inline” symbol=”AAPL” template=”basic” color=”default”] has been the option seller’s “best friend” throwing off nice cash premiums as the stock climbed from $110 to $170 in the last 12 months.
But there are other ways to collect “extra cash” from the Apple growth machine then putting all of your capital to work in Apple.
In my Options Income Blueprint service we like to sell options on stocks that live in the Apple “ecosystem” (link to WPT gateway sale).
Skyworks Solutions [stock_market_widget type=”inline” symbol=”SWKS” template=”basic” color=”default”] is one of these plays.
Skyworks is a provider of components and chips and the company sells its products to a number of mobile device makers. Skyworks’ business outside of Apple increased 8% in fiscal 2016, according to Merrill Lynch analyst Vivek Arya.
However, Apple [stock_market_widget type=”inline” symbol=”AAPL” template=”basic” color=”default”] happens to be its biggest customer (about 40% of the company’s revenues come from Apple). The stock moves on earnings and news about Apple device sales.
And that volatility makes it an ideal candidate to selling weekly or monthly options for cash income.
Recently we traded options on SWKS for a happy $390 profit in less then two weeks.
The stock enjoyed strong short-term support at $95 and I recommended selling the SWKS January 96 put for $1.80 or $540 per three contracts.
SWKS stock price bounced around and eventually wandered up to $100 before our expiration date.
We closed it early buying it back for $.50 or $150 and locked-up $390 of profit.
We’ll trade Skyworks again soon. I’m looking at 3 to 4 other Apple “ecosystem” stocks that make great candidates to generate premium selling options around Apple volatility.
You can join us…Check-out my “weekly paycheck” solution here.
About The Author
Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.
Mr. Shulman made his first option trade in 1985 – COMPAQ Computer calls – a position that expired worthless. His second trade broke even; the third brought him a year’s salary, a near twenty to one return on his investment. He has never looked back. Michael entered the financial publishing business formally in 2001 as director of research for ChangeWave Research’s institutional research business and as the writer and editor of Hedge Fund Investing.
He has published two books – Sell Short and Made in America – both of which can be found on Amazon.com. Michael is a frequent contributor to reputable financial sites like Seeking Alpha, MSN, MainStreetInvestor, and Traders Reserve.
His trade recommendations in his Options Income Blueprint, Perpetual Income Portfolio Club and Income Masters services maintain a 98% success ratio, where his trades produced the expected income 98% of the time. No one’s perfect.