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November 23rd, 2014 at 9:14 am
AAPL/JMD – Well, there's not much point to short 2016 $78.57 puts (now $1.70), it's not worth tying up margin on those when you could sell the 2017 $80 puts for $5. You could sell 1/3 as many for the same upside or sell the same amount and make $2.50 in a year (assuming normal decay) vs $1.70. Same goes for the other short puts – you COULD roll them or at least put stops on the ones you have so, if AAPL drops, you can flip to better puts in 2017 at some point (assuming you intend to be a long-term holder).
As to the calls, it looks like you have 125 longs at about $90ish vs 105 shorts at $105 and then 85 more 2017 $90/120 spreads. As I've said to others, you have a very large amount of AAPL positions so I certainly hope this is, in the very least, a $5M portfolio and you can afford to take these risks – otherwise, you should be looking to lighten up after a good run.
The 2016 $90(ish) calls are you big problem, they are $29.50 with AAPL at $116.50 so $3 in premium means they lose 1:1 for any drop in AAPL yet, since you sold $105 calls, they also only have $15 of upside. Obviously, you have 20 extra and they can be rolled to 30 of the 2017 $90/120 spreads to give you $45,000 more upside – so that's easy.
As to the rest, the short 2016 $115s are $13.75 so the net (averageish) of the remaining spreads is $15.75 and you make another $9.25 if AAPL holds $115, so you either believe that or you don't and, if you don't – again the case for lightening up. Since the 2017 $90s are only $33, it's ridiculous to keep your money in the 2016 $90(ish) calls but, since you sold $115s, what I would do is, as follows (again, assuming you want to remain very bullish on AAPL):
I'd do that roll of the naked longs to more 2017 $90/120s and then you have 115 of them and also you have 70 remaining short puts (because you cashed the silly 51) at about $5 so I'd keep a stop on those at $7.50 but then, since that'd down $2.50, I'd say what's the point and just cash the 50 short $90 puts ($3.70) and leave the 20 short $94.29 puts ($4.80) so you just have 20 short puts active.
Now, that would leave you with 20 short 2016 $94.29 puts and 115 2017 $90/120 bull call spreads and 105 2016 $90ish long calls and 105 2016 $105 short calls.
OK, now, since you now have little margin used, I'd use it and just cash all the long $90ish calls for $30ish ($315,000) and leave the spread of the 105 short 2016 $115 calls covered with 115 of the 2017 $90/120 spreads. Since the $115 calls are on the money and since the $90/120 spreads are $25 in the money, you only owe the short callers $5 after the spreads are 100% in the money ($30) and, assuming you paid less than $15 for them, it means you have no loss at all until AAPL is over $130.
That being the case, I'd keep the $300K on the side at least into earnings because, any time you want, you can simply buy 105 of the 2017 $105 calls ($24.50) for just $257,250 to cover all the short (and rollable) calls. Or you can roll the 2017 short $120s up to the $150s for just $8.50 and buy yourself another $20 of upside protection or sell some 2017 $90 puts for $8, etc. etc.
Paper street/Nicha – Wow, that's a strange one. How do they not know who owns it? In NY, you would need to get a present owner search, which shouldn't be too expensive by itself (a few hundred) unless you end up dealing with multiple lots and multiple owners – you won't know until they get started. Have you actually talked to the town assessor and tax department? It's very rare that a town lets a bit of land go untaxed – someone is either paying the bills or maybe the land is in foreclosure and you can pick it up or maybe the town owns it (even by default) and then you have a whole other issue as to whether you should have to build a road at all. Be careful about building a road as you may also have to maintain it and then they may come to you and say sewers are required or sidewalks or lamp posts (and then who plows it?) – this is the sort of things that real estate lawyers should be looking at – not something you try to cut corners on in the planning phase.