Apple Inc. (AAPL) PriceWatch Alert With Support Around $156.21

Posted on Friday, September 05, 2008 8:07 AM

Apple Inc. (NasdaqNM: AAPL) closed yesterday at $161.22. So far the stock has hit a 52-week low of $115.44 and 52-week high of $202.96. Apple stock has been showing support around 156.21 and resistance in the 170.41 range. Technical indicators for the stock are Bearish and S&P gives AAPL a weak 2 STAR (out of 5) sell rating. AAPL appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '09 170 covered call (APV AN) for a net debit in the $146.17 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 9.34% downside protection and a 16.30% assigned return rate for a 44.41% 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 '10 90 Call (WAA AR) and selling the Jan '09 170 call (APV AN) for a $65.50 debit. The trade has a 134 day life and would provide 3.55% downside protection and a 22.14% assigned return rate for a 60.00% annualized return rate (for comparison purposes only). Apple does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]