As you may have heard, Apple (AAPL) is planning to launch its iPhone this week. The competition in the phone market is brutal and many have speculated how Apple can compete in such a crowded marketplace. Interestingly, there aren’t an excessive number of phones in the high-end market where Apple finds itself.
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An audio podcast of this article is available at: poweropt.com/podcasts/2007_06_25_AAPL.mp3
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Today, the PowerOptions option blog will take a look at the companies Apple is facing competition with in its high-end marketplace. We will take this set of companies and look for desirable option trades using PowerOptions‘ award-winning suite of option analysis tools.
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AT&T (T) will offer carrier service for the iPhone. Some have criticized Apple for limiting itself to one carrier, but other analysts have publicly agreed with the idea on the grounds consumers often prefer to deal with just one operator. Not to mention it is a much easier arrangement for Apple.
LG’s Prada Phone:
LG Electronics (LGEAF) has a high-end phone licensed with the Prada name. The phone does not have carrier support, but will cut soundly into Apple’s market.
The phone, like the iPhone is touch screen and offers a sleek design developed by the Italian fashion designer. Critics have largely applauded the phone’s comely design.
To own the Prada phone consumers will have to pay between $700 and $900. This is a little more expensive than the iPhone, but undoubtedly both phones will appeal to those with “discriminating tastes.”
Other High End Devices:
Treo, offered by Palm (PALM) and BlackBerry, offered by Research in Motion (RIMM), are solid competitors as well. The Palm and BlackBerry will likely continue to have success with business customers where the iPhone and Prada may have more success as a personal cell phone.
Nokia:
Nokia (NOK) is planning to enter the high-end segment later this year with the N95, so we will include it in our analyses. This phone won’t have the touch screen capabilities, but will offer comparable features to the iPhone.
Looking at this News from an Options Trading Perspective:
Finding the right option trade can be difficult for investors if they don’t have a solid search tool to help them identify trades. Option data and information is often cumbersome and difficult to find. An option investor requires the aid of a reliable tool to help them with the difficult task of identifying solid option trades.
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Potential Trades:
All of the following option trades have 55 days until expiration. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| PowerOptions covered call search Cell Phones (55 days) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AAPL | $124.41 | QAAHC | 07 AUG $125.00 | $8.30 | 6.70% | 7.20% | 7.70% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RIMM | $168.20 | RFYHN | 07 AUG $170.00 | $10.10 | 6.00% | 6.40% | 7.50% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOK | $27.83 | NAYHF | 07 AUG $30.00 | $0.45 | 1.60% | 1.60% | 9.50% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PALM | $16.64 | UPYHW | 07 AUG $17.50 | $0.50 | 3.00% | 3.10% | 8.40% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AAPL:
The Apple trade involves the August $125 call option and offers 6.7% downside protection and 7.7% potential profit if the stock is above the $125.00 strike price at the end of the option period. The stock is currently trading at $124.41.
Competitors for AAPL include: Dell Inc. (DELL), Hewlett-Packard Co. (HPQ), Microsoft Corporation (MSFT), Adobe Systems Inc. (ADBE), Avid Technology Inc. (AVID), Creative Technology Limited (CREAF), DivX Inc. (DIVX), Gateway 2000 Inc. (GTW), Napster Inc. (NAPS), RealNetworks Inc. (RNWK), and Sonic Solutions (SNIC).
RIMM:
The Research in Motion trade involves the August $170 call option and offers 6% downside protection and 7.5% potential profit if the stock is above the $170 strike price at the end of the option period. The stock is currently trading at $168.20.
Competitors for RIMM include: Microsoft Corporation (MSFT), Motorola Inc. (MOT), and Nokia Corp. (NOK).
NOK:
The Nokia trade involves the August $30 call option and offers 1.6% downside protection and 9.5% potential profit if the stock is above the $30 strike price at the end of the option period. The stock is currently trading at $27.83.
Competitors for NOK include: LM Ericsson Telephone Co. (ERIC), Motorola Inc. (MOT), Samsung Electronics Co., Ltd. (private), Openwave Systems Inc. (OPWV), palmOne Inc. (PALM), QualComm Inc. (QCOM), Research In Motion Ltd. (RIMM), and Qiao Xing Universal Telephone Inc. (XING).
PALM:
The Palm trade involves the August $17.50 call option and offers 3.0% downside protection and 8.4% potential profit if the stock is above the $17.50 strike price at the end of the option period. The stock is currently trading at $16.64.
Competitors for PALM include: Hewlett-Packard Co. (HPQ), Nokia Corp. (NOK), and Research In Motion Ltd. (RIMM).
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[tags] iPhone, Prada, Treo, BlackBerry, Samsung Electronics Co., Ltd., AAPL, Apple Computer Inc., ADBE, Adobe Systems Inc., AVID, Avid Technology Inc., CREAF, Creative Technology Limited, DELL, Dell Computer Corp., DIVX, DivX Inc., ERIC, LM Ericsson Co., GTW, Gateway 2000 Inc., HPQ, Hewlett Packard, MOT, Motorola Inc., MSFT, Microsoft Corp., NAPS, Napster Inc., NOK, Nokia Corp. ADR, OPWV, Openwave Systems Inc., PALM, palmOne Inc., QCOM, QualComm Inc., RIMM, Research In Motion Ltd., RNWK, RealNetworks Inc., SNIC, Sonic Solutions, T, AT&T Corp., XING, Qiao Xing Universal Telephone Inc., covered call investment strategy, investment strategy, iron condor, options trading, poweroptions, stock option trading, stock options [/tags]