Apple – Option Trade


Opinion - Market pullback and increased option premiums have provided opportunity to write naked puts against the cash rich elite.  RulingTheMarkets prefers the setups occurring in AAPL and CSCO  - Cisco discussed here - on this market pull-back.
Result - Members could have made about $6,000 in 7 weeks with a significantly out of the money, conservative, naked put position as detailed below.  Become a member today.
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Apple Option Trade
June 5th, 2012
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Bullish case for Apple (AAPL) market capitalization of $525 billion

Apple does not have any “direct” competition.  You could argue they compete with DELL (DELL), Microsoft (MSFT), content delivery companies like Netflix (NFLX), networking companies like Cisco (CSCO), or server manufactures like Hewlett Packard (HP), but currently there is no direct comparison to the business model Apple has created.

In my prior analysis of Westport Innovation (WPRT article can be seen here), I detailed out the frame-work I use to analyze potential investments and how this analysis results in higher success rates.  Let’s use this analysis framework and apply it to our review of Apple (AAPL).

When making longer-term investments how can I best place the odds of success in my favor?

Assuming your pile of money lying around is not unlimited, you must decide what to invest in, and why. Whether it is stocks, bonds, commodities or a Ferrari you must first analyze the business case for your long-term investments – or you’re an idiot.

The next critical item relates to the timing of your investment and applies equally to long-term investments and short-term trades. Bad timing can decimate a good investment. Just look at how many people bought technology stocks in the bubble – Microsoft (MSFT), Cisco (CSCO) and Intel (INTC), just to name a few. All are dominators within their industry and great businesses. All had excellent business cases supporting the investments, but the timing for an investment was awful and as a result, many people took huge losses or are still sitting on unrealized losses 8 years later. Timing is so important and many investors don’t have a clue about it.

When analyzing investments I utilize a four-step process as follows:

  1. Review macro factors driving an industry or company, what I like to call “big-picture analysis”.
  2. Review the specific company fundamentals.
  3. Considering the timing of investments.
  4. Placing the trade – parameters and insight.

Step 1: Big Picture Review – AAPL

The loyal Apple brand followers love their product functionality, company interactions, and retail outlets, and all for good reason – Apple represents quality, ease of use and sleek design.  With new rumored products like AppleTV, iPad mini, iPad sales in China or a new larger iPhone screen, Apple continues to deliver innovative market-leading products.  I have been a user of Apple products for years (Macplus in 1986 was my first product), and I know that they continually incorporate new functionality and usefulness into their products.

Apple now has their cross-hairs set on ruling the TV market.  Flat-panel television sales in the U.S. are at about 38 million units and the global market is expected to reach $110 billion in annual sales by 2016-2018.  The flat-panel TV market represents a huge opportunity for Apple and very well could be their next growth driver as other products mature.


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