(By Rich Bieglmeier) Investors and iAddicts are anxiously waiting for the new iPhone 5. The web is full of release date speculation, but the consensus seems to be the "official" release announcement will come on Wednesday, September 12, with the hyped smartphone hitting the shelves on Friday, September 21, causing a Verizon store "vacation blackout."
Analysts and the stock price are predicting a smashing success for the latest version of the iPhone and Apple Inc. (AAPL) shares. Robert Baird Senior Analyst William Power says iPhone 5 will have the greatest success of all iPhones. However, the blogosphere seems to be more split with the headlines tilting, by the eye, 70% it's time to get in and 30% that you'd better get out.
This column has taken a crack at it too; although, somewhat controversially by comparing search volume traffic for the iPhone 5 versus the iPhone 4 and the iPhone 4S. Some have taken issue with the idea that Google search volumes can be predictive; however, the study we referred to uses the Russell 3000 over multiple years and found, conclusively – different than universally – that there is absolutely a link.
Once again, we checked Google Trends, and while the number of queries continues to climb, current iPhone 5 searches still lags 2012 peaks and are well behind iPhone 4 and iPhone 4S - let the speculation rage.
What is will be known soon enough? In the meantime, iStock looked back at AAPL's past performance in the run up to the launch of iPhone 4 and iPhone 4S.
iPhone 4 was officially announced on June 4, 2010, and the stock peaked on June 18, 2010 with a closing price of $272.90. The stock didn't close higher until September 17, 2010 at $274.19. In between, shares fell 12.5%, bottoming on August 24, 2010 at $238.90.
What about iPhone 4S you ask? It was announced on October 7, 2011, partially released to seven countries on October 14 and fully unloaded on October 28, 2011. Much like iPhone 4, Apple's stock reached a short-term closing high soon after the release date announcement. AAPL closed at $420.43 on October 18, 2011 and finally closed higher on January 6, 2012 at $420.59. Between high to high, shareholders must have been dismayed watching the tech giant's shares fall to a November 25, 2011 closing low of $362.02, dropping nearly 14% from its October high.
While past performance supposedly means nothing, again, we see Apple Inc. (AAPL) setting the pace with new highs as the official release date and launch approach. iStock can't say for sure that the world's biggest stock is ready to stall for the rest of the year, but… if history is our guide, then shareholders might consider taking some defensive action to protect 12%-14% of their profits.
According to the past, investors could purchase a protective put and look to unload it if/when AAPL shaves 10% off from its near-term high following management's release date proclamation.
Another possibility is to take profits and buy enough call options to match your current holding - just keep in mind that taking profits could have tax consequences. For example, by the crudest definition, if you own 500 shares you could replace it with 5 call options. However, one would need to use delta as a means to accurately, synthetically create a long position of 500 shares using calls.
Writing covered calls is a third possible way to protect or minimize losses if the street sells on the news. Based on past performance, investors might consider selling out-of-the-money calls for December. Of course, there is the risk you could lose the stock if AAPL's price is higher than the call strike price at expiration.
The final choice is to ride out any rough weather and wait until Apple Inc. (AAPL) makes a new high, roughly three months after the iPhone 5 is a reality, and then you might want to load up as the stock gained 33% and 50% following making a new high in 2010 and 2012, respectively.
(image courtesy- 1000 Words / Shutterstock.com)