We've got one bullish strategy and one neutral strategy.


NEW DIRECTIONAL CALL PLAYS

Apple Inc. - AAPL - close: 169.40 change: +0.34 stop: 163.40

Why We Like It:
There are plenty of reasons to be bearish on AAPL. You could point out that shares are overbought having risen more than 100% from their 2009 lows. You could just point to the $35 rally from its July lows. Technical traders might point to the megaphone pattern building on the daily chart (see below). Yet until the trend eventually breaks buying dips is one of the best ways to play AAPL. We know that money managers are desperate to get long the winners to help them perform better. Many mutual funds only have two months left as their fiscal year ends at the end of October. That's why corrections in AAPL should be shallow.

I am suggesting readers buy calls (small positions only, 1/2 to 1/4 our normal trade) on a dip at $166.50. We'll use a tight stop loss at $163.40. More aggressive traders can use a stop loss under $160 and the August low of $159.42. If we are triggered at $166.50 our first target to take profits is at $174.00. Our second target is $179.00. FYI: The P&F chart points to a $231 target.

Suggested Options:
I am suggesting the September calls although Octobers would probably work just as well and give you more time.

BUY CALL SEP 165 APV-IM open interest=15999 current ask $7.90
BUY CALL SEP 170 APV-IN open interest=17419 current ask $5.05
BUY CALL SEP 175 APV-IO open interest=17898 current ask $2.96

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 166.50
Change since picked:      + 0.00
Earnings Date           10/21/09 (unconfirmed)
Average Daily Volume =        14 million  
Listed on August 25, 2009         


NEW MARKET NEUTRAL STRANGLE PLAYS

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

Research In Motion - RIMM - close: 75.56 chg: -0.70 stop: n/a

Why We Like It:
RIMM has been consolidating sideways in a wide, neutral triangle formation of rising lows and falling highs. The stock is poised to breakout soon. While it looks like the next move is going to be down betting against the market has been a losing proposition lately. That's why I'm suggesting a strangle. We don't care what direction RIMM goes as long as it moves far enough. I would open positions now in the $73.50-76.50 zone.

Suggested Options:
September options expire in just less than four weeks so this is slightly aggressive. You could always try this with October options. I'm suggesting the September $80 calls and the September $70 puts. Our estimated cost is $2.64. We want to sell if either option hits $6.00 or higher.

BUY CALL SEP 80.00 RFY-IP open interest=22616 current ask $1.47
-and-
BUY PUT SEP 70.00 RFY-UN open interest=20757 current ask $1.17

Annotated Chart:

Picked on   August 25 at $ 75.56
Change since picked:      + 0.00
Earnings Date           09/24/09 (confirmed)
Average Daily Volume =      11.7 million  
Listed on August 25, 2009