NEW YORK (TheStreet) - Apple (AAPL) is discounting its Apple-TV, a rare event that could translate into a catalyst for a stock that has under performed this year.
Shares are down 6.2% in 2014, closing Friday at $526.24, but Apple's discount on Apple TVs purchased from now until March 5, suggests the company may be poised to release its next generation of the television streaming device. The discount, by the way, includes a chance to get a $25 iTunes gift card.
Apple TV buyers may also be rewarded for waiting for the next generation product. It's unusual for Apple to discount anything, and if the company is about to release the next generation TV, it may need the room in the warehouse.
It's hard to imagine apple is having inventory issues, especially in light of the promotion localized to the U.S. With that said, if Apple doesn't release a new TV relatively soon, the gift card may mean soft sales and lower revenue / margins (because of discounting). It's reasonable to assume we should expect an announcement of the newest TV.
Second, if the company does release a next generation TV anytime soon, the positive media attention should be a catalyst for a move higher. A 2-5% lift as a result of renewed enthusiasm for the product is probable, especially with the shrinking float as a result of share buybacks.If you're a long-term investor, I wouldn't become focused on the daily chart if you watch it at all.
This covered call caps the profit at $43.88 ($560 strike - $516.12). Even so, that's about a 9% gain in under 90 days if you count a dividend payment. On the other hand, if the stock goes nowhere and is at the same price, the option seller keeps all the premium and the stock. Best of all and my favorite reason is covered calls lower volatility compared to simply buying the stock. At the time of publication, Weinstein had no positions in securities mentioned. Follow @RobertWeinstein This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV