AAPL lost its mojo when Steve Jobs died, but it is still a stock to be reckoned with because of the company’s size, its strength and high margins in cell phones, and the obsessive loyalty of its customers. Although I’ve been dissing the stock for months, the next appealing opportunity may come from the buy side. Notice how the stock recently bounced from just above a midpoint Hidden Pivot support at 103.34 (see inset). My hunch is that it will eventually come down to within pennies of this number, then reverse sharply. To leverage this scenario, I’ll recommend bidding for four 105-strike calls with three weeks left on them if and when AAPL trades down to 103.44. The calls should be selling for around 1.60 apiece then, but we can hone our bid when the time comes. The best way to do this without using a Black-Scholes calculator is to simply observe how bid and ask for the options change when the stock gets within 0.50 or so of the target. Monitor the calls this way for about 20 minutes, and you’ll be an instant expert on their ‘fair value’ when it comes time to buy them. Of course, you can also buy stock instead of options if that is your preference. _______ UPDATE (January 4, 9:41 a.m. EST): This morning’s gap-down opening crushed the 103.34 Hidden Pivot support, negating the trade. If you did it anyway via a market bid for Jan 29 105 calls, they opened for 2.51 and would be showing a large profit at the moment, since they are 3.40 bid. Cash out half of the position and use a break-even stop-loss for what remains. A 93.09 target (p2) is in play, implying AAPL could become a mechanical short from 103.34 later this week or early next. _______ UPDATE (9:48 a.m. EST): One subscriber reported getting aboard, but I’ll wait till I hear from others before I establish a tracking position. [Nothing back, so no position taken.]
