Apple's Easy Money Run Has Begun

NEW YORK (TheStreet) -- Apple stock is in bull mode. Make that ultra-bull mode. Since the Nov. 25 low of $363, this stock has risen 56%.

The trading range of 2011 that limited Apple's upside because of the Steve Jobs uncertainty, the European sovereign debt crisis and trepidation because of the delayed iPhone 4S -- all are long gone. From Jan. 1, 2010 until Nov. 25, 2011 Apple investors suffered through 10 corrections that sold off an average of $42 each time. Those trading ranges have been replaced with the kind of action we haven't witnessed since 2007.

In 2007, Apple experienced a dramatic 135% nine-month rise from $84 to $198. During that run Apple only had seven corrections that exceeded $5. Excluding the typical August low, the average selloff lasted seven days and the stock corrected an average of $8.40.

The current run is showing similar characteristics. On a percentage basis, this current run is tracking even better than the 2007 run. It's taken 15 years and a lot of work for Apple to rise to its $500 price level. The next $500 will likely come over the next 36 months in a relatively easy money run enabled by a growing economy and a market share bonanza.

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Investors who want to take full advantage of this new Apple action are able to maximize returns beyond common stock ownership by owning option LEAPS. For example, on Feb. 28 we allocated 30% of the portfolio at ApplePlusPortfolios.com to AAPL January 2013 $480 calls and 10% of the portfolio to AAPL April 2012 $510 calls.

Our strategy is simple. We "buy to open" contracts of the desired option and make sure to "sell to close" before the date of expiration. Since purchasing these particular options 17 days ago, the January 2013 calls are up 36% and the April options are up 85%.

When investors are able to get the timing right, these options provide upside that is impossible to capture with common shares of stock. During these 17 days, the stock has risen 8%. As you can see, using options at the right time can rapidly build wealth. The low p/e and the high growth rate make Apple the perfect options trading vehicle.

There are certain times when it makes sense to utilize option LEAPS as a stock replacement. This is one of those times. With the new iPad going on sale this Friday, the quarterly earnings report coming up in April, a possible iTV event this summer, and an iPhone 5 release in the fall this stock is primed to repeat its 2007 performance. Add in the positive uncertainty of a possible dividend announcement and 2012 could end up being one for the Apple history books.

For those who are interested in learning more about options and how to take maximum advantage of this unique Apple opportunity we have organized the 2012 Apple Investor Summit this Thursday and Friday, March 15 and 16, at the Los Angeles Convention Center.

It is our goal to make sure this event is worth your time. The Summit features keynote presentations by Apple cofounder Steve Wozniak along with Steve Jobs biographer Walter Isaacson. I will be speaking alongside 15 other money managers, authors and bloggers in an attempt to educate individual investors about the Apple opportunity, especially with options.

To sum it up, the next two years of this Apple run are what we like to call "easy money." It's Tim Cook's job to expand the company that Steve Jobs built and he is off to a great start. It's our job to maximize our returns during this window of opportunity.

At the time of publication, the author was long AAPL, although positions may change at any time.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Jason Schwarz is an option strategist for Lone Peak Asset Management in Westlake Village, Calif. He is also the founder of the popular investment newsletter available at www.economictiming.com. Over the past few years, Schwarz has gained acclaim for his market calls on the price of oil, Bank of America, Apple, E*Trade, and his precision investing in S&P 500 option LEAPS. His book, The Alpha Hunter, is set to be released by McGraw Hill in December 2009.

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