Apple Inc. (AAPL) 10/30/09 PriceWatch Alert Down To $188.85 Break Even

Posted: Friday, October 30, 2009 8:28 AM EDT
By: Market Intelligence Center Staff

Apple Inc. (NasdaqNM: AAPL) closed yesterday at $196.35. So far the stock has hit a 52-week low of $78.20 and 52-week high of $208.71. Apple stock has been showing support around 190.43 and resistance in the 199.77 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 Dec '09 200 covered call (APV LT) for a net debit in the $188.85 area. That is also the break even stock price for this trade. This covered call has a 50 day duration, provides 3.82% downside protection and a 5.90% assigned return rate for a 43.10% 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 75 Call (VGA AO) and selling the Dec '09 200 call (APV LT) for an $115.85 debit. The trade has a 50 day life and would provide 2.80% downside protection and a 7.90% assigned return rate for a 58.00% annualized return rate (for comparison purposes only). Apple does not pay dividends at this time. [FBB-Seven Summits Research]