The solution to this situation is simple: build a fence around your gains !
- sell a covered call at the money
- and buy a put with the money from the call
If you bought Apple, you might want to cash in the gains in stock price + the dividend
At the same time there is point in keeping the Apple stock for a while due to the dividends they are paying. In the past 2 years Apple has changed in management style, obviously because they lost their very charismatic and strong leader, but also because the company has not been able to keep on innovating and revolutionizing the market. The firm is now more taking advantage of its extremely good products that are sold at high margins. They are no longer shooting for the stars but are merely milking their cash-cows. The reaction that came was obvious. Since Apple has proven they cannot keep on investing money in marvel projects, large activist fund managers have put pressure on Apple's management to start giving back the company cash to investors in the form of dividends (see Reuters article here about shareholders suing Apple earlier this year). And it worked as you can see in an increase in the Dividend history (taken from Apple's own web page):
We can assume that they will distribute again $3.05 per share in November. That means for you a dividend of $305 that is bound to come...
Building a fence around the Apple stock
- Buy a 480Put dec13 for $2,525.00
- Sell a 480Call dec13 for $2475.00
- if the stock price is higher than $480 you will be obliged to sell the stock to the holder of the CALL option that you have sold today for $480
- if the stock price is lower than $480 you will be more than happy to exercise you put option and sell the stock for $480