In some ways Apple has been the best idea I shared with you in 2007. As the stock breaks through the $200 barrier, which was my original price target (now ratcheted up to $225 two BLOGS ago), I have formally changed the price target/SSL to $225 and $175 respectively.
AAPL’s charge through $200 is bittersweet for me as I wrestle with the next dilemma. As I previously disclosed, I still own 10 Jan 130 calls at $12.30- about a $12,300 investment. As the stock breaks through the $200 barrier, that investment is currently worth about $71,000- that’s about 7 times my money since the middle of August- one of the better trades I have made in a long time.
Here’s the problem- these options are going to expire the third Friday in January, and I want to keep a long term position in Apple- one that can appreciate with the next two waves of growth- specifically the dramatic growth of iTV along with dramatic growth in MAC sales.
Have you heard the term “Halo Effect”? Apple has it. Everything the company does is angelic. The positive vibes emanating from several of their product lines (iPhones and iPods) are carrying MAC sales up with it. iTV will follow next year. Did you read what happened today? Rupert Murchoch signed on to provide movies to iTunes from Time Warner. Why fight the rising digital tide in entertainment distribution?
Here’s the chart, dating back to my first edition on the company in August. I’m definitely tooting my horn on this one a little, but I’ve earned the right:
Nothing but good calls and a fun ride on this one. I hope you were on board.
So, what now? I’d like to have some kind of position in this stock for the next couple of years, but it’s awfully tough to buy up here. Between now and the third Friday in January I have to either sell my calls or exercise the option, which might not be a bad idea.
I’m not sure how to do it yet. I will continue to hold on to the options into January as I believe there could be another leg up as the volume of AAPL products sold during the Holiday Season pushes the stock a bit higher. I believe the big surprise will be in MAC sales, where the success of the iPhone combined with the positive reviews of the new Leopard Operating Systems are fueling demand. As a percentage of the overall PC market, MACS have the most upside, and they are now becoming more main stream.
What to do stay invested in AAPL? A very high class problem, but none the less still a problem. I’ll let you know.
Comments and questions are welcome.