How to Take A Bite of Apple, Inc (AAPL) stock

Market Summary

For the past few weeks, most of the major stock indexes have been consolidating around their four year price highs. It is typical for the major stock indexes to make multiple attempts before finally breaking clear to even higher levels as the technical picture remains bullish for stocks intermediate term direction. Large cap growth stocks and technology shares are leading the market higher which is considered a good omen for the bullish price move.

The leader of the pack for the technology sector is Apple, Inc. (NasdaqGS: AAPL). Apple is all the rage after winning a landmarkpatent infringement suit against Samsung. Immediately after the verdict was announced, Apple stock price shot up to its $680.87 all-time high. Shares pulled back a bit today, but virtually everyone expects it to hit the magic$700 very soon. Actually, unless the market crashes, market pundits are counting the days until Apple hits the golden $1,000 per share. Eventually the stock will probably split, but that should serve to make current shares even more valuable.

Investor Analysis

Apple, Inc (AAPL) current $674.80 stock price is relatively expensive for a lot of people. Apples shares may pull back a bit before heading higher, but even if it pulls back to its price before the Samsung verdict that still is around $650 a share. Purchasing just one block (100 shares) of Apple stock at the current price would cost almost $70,000 including commissions and fees.

Possible Strategy

LEAPS offer a viable alternative to purchasing the actual stock. Long Term Equity Anticipation Securities (LEAPS) basically are long-term option contracts (lasting several years) that can provide the benefit of stock ownership. Purchasing Apple, Inc LEAPS instead of the stock risk less capital than is required to buy shares. For example, for approx. $100 per share you can buy Apple, Inc (AAPL) $680 strike price calls that expire Jan. 18, 2014 (LEAPS). The one Apple, Inc. LEAP contract would cost approx. $10,000 ($100 x's 100 shares). Obviously this is significantly less than the approx. $70,000 for an outright AAPL stock buy. If Apple, Inc. stock continues to move higher the value of the LEAPS appreciate similar to the stock. For an explanation on the basics of option trading and description of how trade is set up go to http://www.theoptionplayer.com/strategies/

By Gregory Clay