Sunday, March 3, 2013

Taking a Bite of the APPLE

Many investors in the technology sector debate the relative merits of Apple and Google.   CCI missed the early and large run in Apple over the past several years.  However, as documented  here, CCI believes Google (Goog) would be the better investment than Apple of the past year.  Not to say I told you so but...Google is now trading up to over $800 and Apple down to around $430.

At this point,  Google's TTM P/E is now 25 while Apple's is now single digits. While CCI still believes Google is more likely to be the technology leader,over the longer term, these valuations levels make a compelling case for an Apple now. 

Apple (AAPL) hit a 52 week low on Friday and CCI decided it was time to take a bite of the Apple. My overall thesis is not so much that Apple will soar back to $700, but rather believe/hope that the bull/bear debate about Apple will mean there is a high probability of trading in a range over the next year or two.  To try to capitalize on that thesis, with Apple trading around $433, CCI bought the January 14, $300 call for $137/contract.  In its simplest from this is a long position in Apple leveraged about 3x.  To offset the risk of this leverage and try to capitalize on a potential sideways volatility of Apple CCi intends to sell call against this position.

Stay tuned.

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