Established Cash-Secured Puts Position in Apple Inc.

A new position was established in Apple Inc. (ticker AAPL) by selling two September 18th, 2020 100% Cash-Secured Put options at the $102.50 strike price at $2.37 per share when the price of Apple stock was at $112.35 per share (9.6% above the strike price).  This is a conservative position since the probability that the Puts expire worthless on the options expiration date was 80.7% when this position was established. 

The 69.5 Implied Volatility for these Apple Put options was especially attractive to the Covered Calls Advisor since it is well above the current S&P 500 Volatility Index (VIX) of 37.8.  With the steep market sell-off yesterday and today, both Implied Volatility levels are currently more than twice their long-term historic averages.  Apple's stock price has been especially hard hit the past two trading days [RSI(2) = 6.0] declining from its high price on Wednesday of $137.98 to $112.35 (an 18.6% decline) when this transaction was executed today.  So the $472.66 ($2.37 per share x 200 shares - $1.34 commission) is a very nice premium to receive for these out-of-the-money (i.e. strike price below the current stock price) Put options, especially considering that there is 9.6% downside protection to the strike price and only two weeks until the options expiration date.  It is difficult to maintain a calm temperament during a dramatic market decline as experienced these past two days, but the accompanying spike upward in volatility can sometimes be an opportune time to sell options to receive the high premium income available to us option sellers.  Importantly, earnings report uncertainty is not contributing to Apple's current elevated volatility level since they reported 2nd quarter earnings on July 30th, so there will be no earnings report prior to the September 18th options expiration date. 

As detailed below, for this new Apple Inc. Cash-Secured Puts position there is potential for a +2.4% absolute return in 15 days (equivalent to a +57.4% annualized return-on-investment).  

Apple Inc. (AAPL) -- New 100% Cash-Secured Puts Position
The transaction today was as follows:
09/04/2020  Sold 2 Apple Inc. September 18th, 2020 $102.50 100% Cash-Secured Put options @ $2.37 per share.

The Covered Calls Advisor does not use margin, so the detailed information on this position and the potential result detailed below reflect that this position was established using 100% cash for the two Put options sold.

A possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $20,027.34
= ($102.50 - $2.37) *200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$472.66
= ($2.37 *200 shares) - $1.34 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Apple stock is above $102.50 strike price at the September 18th expiration): +$0.00
= ($102.50 - $102.50) *200 shares

Total Net Profit (If Apple stock price is above $102.50 strike price at options expiration): +$358.66
= (+$472.66 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return (If APPL is above $102.50 strike price at the Sept 18th options expiration) : +2.4%
= +$472.66/$20,027.34
Annualized Return: +57.4%
= (+$472.66/$20,027.34)*(365/15 days)

The downside 'breakeven price' at expiration is at $100.13 ($102.50 - $2.37), which is 10.9% below the current market price of $112.35.