Apple Inc. (AAPL) 3/19/10 PriceWatch Alert Targets 26.45% Return

Posted: Friday, March 19, 2010 8:02 AM EDT
By: Market Intelligence Center Staff

Apple Inc. (NASDAQ: AAPL) closed yesterday at $224.65. So far the stock has hit a 52-week low of $100.25 and 52-week high of $227.73. Apple stock has been showing support around 221.70 and resistance in the 226.48 range. Technical indicators for the stock are Bullish and S&P gives AAPL a positive 4 STAR (out of 5) buy rating. AAPL appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jul '10 230 covered call for a net debit in the $211.60 area. That is also the break even stock price for this trade. This covered call has a 120 day duration, provides 5.81% downside protection and an 8.70% assigned return rate for a 26.45% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the AAPL Jan '11 170 Call and selling the Jul '10 230 call for a $49.60 debit. The trade has a 120 day life and would provide 2.25% downside protection and a 20.97% assigned return rate for a 64.00% annualized return rate (for comparison purposes only). Apple does not pay dividends at this time. [FBB-Seven Summits Research]