Options Strategies For Income From Stock Technical Analysis of Apple Stock

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Options Strategies For Income can be easily built around using Stock Technical Analysis indicators on stocks. In this three-part article I will look at some simple Options Strategies For Income on Apple Stock. Select this options strategies for income link to view present Apple Stock options premiums. Before putting deciding what options strategies for income to use, we need to do a little stock technical analysis on Apple Stock to get us a roadmap of where we want to go and how to get there.

Apple Stock declared a dividend on August 9 of $2.65. Apple stock pushed higher that day and closed above $620.00. Apple stock continues to climb and could be on the verge of a breakout. If Apple Stock does breakout it is perhaps anyone’s guess what price Apple Stock could reach in the short-term. If it doesn’t breakout downside could be limited to around $600.00.

Options Strategies For Income

Through using Stock Technical Analysis I can prepare a number of options strategies for income against Apple Stock. Even with Apple Stock on the verge of a breakout, putting in place options strategies for income can still be undertaken with the help of  Stock Technical Analysis. This should allow me to determine the use of simple or complex options strategies for income which will allow for profit in the present Apple Stock rally as well as limited protection.

Apple stock had been in a general rise until April when it reached an all time high of $644 on April 10. At the time of my writing this article Apple Stock is trading for $626.00. When developing options strategies for income, no matter how simple or complex, it is important to try to establish support valuations in the stock. These support valuations give a basis to determine which options strategies for income should be used. If support is soft then different options strategies need to be used and often I will select more complex options strategies for income such as verticals, iron condors or spreads. If support is stronger than I normally select simpler options strategies for income like my favorites put selling or covered calls.

Complex Versus Simple Options Strategies For Income

In investing through options strategies for income and profit, there are always trade offs just as there is in equities trading. Some options strategies for income are more complex but can provide more protection. Other options strategies for income can provide very little protection but a higher level of profit. Complex option strategies often bring in smaller profits in return for higher protection. As well complex options strategies for income often require more adjusting or have more commissions to be paid. Simple options strategies for income such as put selling often have only one commission to be paid but the level of protection can be a lot less. Covered calls options strategies for income for example has at least two commissions to be paid and provides a small amount of protection. For interested readers this options strategies for income link will take you to an article where I discuss why I think put selling is superior to covered calls.

Rescue Strategies For Options Strategies For Income

There is a trade-off that every options investor must consider when using options strategies for income. I prefer simpler options strategies for income primarily because I find that when an options trade does not work out I can easily make adjustments that require less work and less commissions. For example my favorite options strategies for income is put selling. This is because it is rare when I use put selling options strategies for income, have the trade not work out and am unable to return the trade to profitability.

Even Covered Calls Options Strategies For Income while not providing the best level of protection, does have numerous rescue strategies that I can apply to keep the covered calls trade profitable.

With almost every options strategies for income I use I already have in place my rescue strategies before I even engage in the options trade. I believe strongly in having a plan.

Stack The Odds Of Success In My Favor When Using Options Strategies For Income

I find that many options traders put in place a terrific iron condor, butterfly, vertical or calendar spread but are not prepared for when the options trade becomes a loss. I believe the most important aspect of using options strategies for income is to have rescue strategies that can take almost any options trade and return it to profitability.

This is exactly the case with this Apple Stock options trades. I have specific rules I like to follow when using options strategies for income. One of those, as many readers will know, is the importance of a trading range. Until I see a trading range that gives me a lot of confidence in the ability of my options strategies for income to work with limited risk of loss or assignment I do not engage in any options trading.

There are hundreds of stocks to choose from every day in the stock markets. There is never a need to engage in a risky trade in the hopes that the options strategies for income being used might work out. Instead I like to stack the odds of a successful trade in my favor and that means the stock needs a trading range, support levels and options rescue strategies in advance of placing the trade.

Apple stock does have a trading range, does appear to have good support at $600 and I know what rescue strategies to apply. Therefore for Apple Stock I would look to do Put Selling or Covered Calls in a slightly different manner to generate income while the stock remains of interest to a lot of investors which helps to support the stock at these levels. Before engaging in any Profit and Income Strategies I always review the financial history of the underlying company. That can be done through this Stock Technical Analysis link.

Stock Technical Analysis on Apple Stock

By looking at the 6 month Apple Stock chart I can get a stock technical analysis roadmap. Since April the $600 strike has been revisited numerous times and would seem to indicate there is a lot of support at that level. Volume has also been quite good when Apple Stock has reached and traded within the $600 valuation. Over the past 5 months Apple Stock has stayed in a narrow trading range. Normally a narrow trading range prepares a stock for either a break down or break out. In the case of Apple Stock there is strength around $600 so the easier move right now is a break out. Knowing the support level is an important step in determine my options strategies for income selection for any stock.

options strategies for income with Apple Stock

6 Month Apple Stock price chart indicating where support may lie is important when developing options strategies for income on any stock.

If I as an investor would like to benefit from Apple Stock and its current uptrend I need to decide which options strategies for income to choose. To do this I normally look at the 6 month chart (which is above) and a 3 month chart, below. I have marked the 4 most important aspects of the 3 month Apple Stock chart.

Apple Stock Put Selling Chart

Put Selling Indicators For Apple Stock based on 3 month chart

A.  The 10 period simple moving average recently crossed over the 20 day exponential moving average and never broke through the 30 day exponential moving average, which is a decent sign of support in the stock.

B.  There is plenty of room to move to the Upper Bollinger Band before this latest push in Apple Stock could slow. Apple stock short-term could reach $640.00.

C.  The dividend payout of $2.65 on August 10 will now lend some support to Apple Stock.

D.  $600.00 is a good support point short-term and if Apple Stock breaks-out which looks likely, support should build above the $600.00 level.

As Apple Stock has flirted with $600 for the past 5 months, I know from using Stock Technical Analysis indicators that at $600.00 I can count on the stock giving me opportunities to get out with no losses should the stock pull back. As well should stock get assigned at $600.00 I would own it short-term and be happy to sell either at the money or in the money covered calls to be exercised out. I believe there is enough support at $600.00 that I will have various opportunities to get out of the stock. Therefore I don’t see the need of complex options strategies for income but instead would stay with my favorites of put selling and covered calls.

Stock Technical Analysis For Profit and Income Strategies

To generate Profit and Income Strategies I always turn to Stock Technical Analysis. While Apple Stock does appear poised for a breakout, let’s look at the stock technical analysis indicators to get some idea as to the possible strength of the breakout and try to develop Profit and Income Strategies. All readings presented are as of Friday’s close.

Momentum is still strong although it is falling. The strength of the rally is reflect in the reading of 106.24 although Momentum shows that it was much stronger earlier in the week last week.

MACD Histogram is always an excellent stock technical analysis tool to use. On Friday MACD was quite positive but the divergence was falling from earlier in the week which supports Momentum’s change from a very strong reading to the falling reading of Friday.

The Ultimate Oscillator is showing overbought but certainly not at extremes. All three of the previously mentioned stock technical analysis indicators are reflecting that the rise in Apple Stock is seeing less investor conviction as the stock climbs. This is normal in a rising stock as investors remain cautious as Apple Stock climbs as no investor wants to buy only to find the stock has topped out even if it is just for a short time.

Rate Of Change stock technical analysis tool is very bullish and continuing to rise. This shows the belief among investors that even if they are cautious they believe the stock is moving higher and are buying in small quantities as Apple Stock pushes higher.

The Slow Stochastic is overbought and reaching into extreme levels. The reading though overbought is also somewhat neutral which would indicate that while overbought Apple Stock could move higher before a pull back occurs.

The Fast Stochastic is reaching very overbought levels and indicating that while the momentum is still up, Apple Stock could be getting ready to pull back.

The technical indicators are telling me that I should be able to proceed with selecting my options strategies for income and put the trade in place.

Stock Technical Analysis Apple Stock

Stock Technical Analysis indicators for Apple Stock should the strength of the recent rise in Apple Stock

Conclusion – Stock Technical Analysis For Options Strategies For Income In Apple Stock

Stock Technical Analysis of Apple Stock shows good support around $600.00 and room for the stock to rise a bit more from here but with overbought indicators flashing everywhere, Apple Stock may need a short rest to pullback and build some further support. That would work well for my Profit and Income strategies because if more support could be built into Apple Stock above $600.00 it can only assist my options strategies for income more.

As well, should Apple Stock break through the Upper Bollinger Band it could easily push to the $640 level even with strong overbought indicators as a technical breakout in a stock like Apple Stock will draw investors who will most definitely buy into Apple Stock pushing it higher. Again this will support my options strategies for income selection of more simpler options strategies rather than complex.

The Stock Technical Analysis provides a map as to what profit and income strategies can be used on Apple Stock. There are, as explained, a variety of options strategies for income that can be put in place including the more complex option trades such as butterflies, strangles, straddles, iron condors, or a number of spreads. However as explained earlier, after reviewing the stock technical analysis indicators on Apple Stock my options strategies for income selections will be simply Put Selling and Covered Calls.

Part 2 – Put Selling For Income With Apple Stock

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  • Actually in the money naked puts would be great for the stock since it is in an uptrend. You can read my Apple Stock articles dealing with in the money naked puts and see what you think.