Apple Inc. (AAPL) PriceWatch Alert Up To 10.18% Downside Protection

Posted on Monday, September 08, 2008 8:07 AM

Apple Inc. (NasdaqNM: AAPL) ended the last trading session at $160.18. 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 155.33 and resistance in the 164.83 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 '09 165 covered call (APV AM) for a net debit in the $143.88 area. That is also the break even stock price for this trade. This covered call has a 131 day duration, provides 10.18% downside protection and a 14.68% assigned return rate for a 40.90% 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 '09 165 call (APV AM) for a $63.10 debit. The trade has a 131 day life and would provide 4.42% downside protection and an 18.86% assigned return rate for a 53.00% 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]