What You Can Trade If You Can't Trade Apple

You love Apple, I mean who doesn’t, they have the ipad, the iphone, they have a monopoly on inspiration and innovation they seem to have it all.  They have gone from just one of the players in the stock market, to the player in the stock market.  Their market cap erupted and now is over 600 billion dollars 200 billion more than Exxon Mobile the 2^nd largest market cap company on the planet.

So what’s not to love about Apple,  the price $662, I’m not saying it’s not attractive, quite the contrary it has a very attractive stock price relative what most analyst believe Apple is worth somewhere in the realm of $1000/share, but let’s face it if you have a smaller account buying a few shares of Apple is pretty expensive, even some of the options for LEAPs (long term options) are expensive as well.  January 2013 680 calls are $46 or $4600 for 1 contract and that is a little steep for some.  So where is the alternatives.

Lets look at a few possibilities that could be a great substitute for Apple.

Cirrus Logic (CRUS)

So who is Cirrus Logic?   The company derives the majority of its revenues from the lineup of Apple products, where they have their audio codec chip in several generations of the iPhone and iPad.  Meaning that  Apple is responsible for about 70% of Cirrus' revenue stream, and with the coming release of the iphone5 it holds the advantage that it can ride the wave that Apple is on.  It trades for $42 a share and earnings are projected to be up 111.54% for the coming quarter.  So it has an attractive price which means that the options prices are also attractive.

The chart of CRUS shows that its pulling back slightly after a big breakout in August and this is good for traders because it offer a lower price to get in.  These type of tight trading ranges can offer a good launch pad for it if Apple takes off

Another alternative to trading Apple out right is the QQQ’s.  Apple makes up 20% of the QQQ’s meaning that if the Apple moves on news or product announcement, you should see the QQQ’s pop as well.  The QQQ’s are trading at around $68, but what is nice about the QQQ’s is the volume.  Its average volume hoovers around  25 million a day one of the most liquid ETF’s out there. 

This summer it has formed a very nice base and it is starting to break out after an August handle formation.  If Apple moves this ETF has the potential for very big gains.

So, yes there are some good alternatives for Apple out there that you can trade if Apple is simply to expensive for you and your account.