How to Trade Apple, Inc on Monday

While daytrading the shares of Apple, Inc. (AAPL-NADSDAQ) can often be a fools game for all but the best traders, everyone with an Ameritrade account is trying to position themselves ahead of Monday's Worldwide Developers Conference.

The resurrection of the Jesus phone has many pro's looking to fade a ramp, while the geeks are most certainly long for life. But the pro's who are looking to fade the stock at the close Monday are beginning to psych themselves out, if this IM reply is any indication:

Me: Is AAPL a short on the close Monday?

Hedgie: i would like to say yes, but that's probably too pat. with its iconic status, a lot of emotions swirling there........might be one of these double reverse psychology deals.

But clearly the SellSide is expecting big things. RBC is assuming Apple will ship a 3G iPhone by July, with 14 million units shipping in 2008, and 24 million in 2009. The ramp should be rapid as they stock at retail; 4 to 5 million iPhones sold in the 90 days after launching. An entry level iPhone and or compelling pricing could double RBC's estimates, which would move the needle to 25 million iPhones this year and perhaps 40 to 50 million in 2009, according to the research note.

But one crucial word could set the tone for trading, and impact Research in Motion's stock as well.

Subsidies.

Yes, that seems to be the operative word here. It could impact many of the moving parts in the financial model, perhaps even negatively, but retail price points are the big issue, according to Avian Research

At this point we expect few surprises with regards to form factor and features and believe the key issue that investors are likely to focus in on is the pricing scheme. Many are speculating that, unlike with the first generation iPhone, Apple will embrace the carrier subsidy model in effort to bring the retail price point of the device more in line with competing subsidized devices from RIM (RIMM) and others. As a reminder, our checks at AT&T (T) stores in past months have showed that the iPhone at the $399-$499 price point has a difficult time competing with RIM’s devices (Pearl, Curve) priced in the $99-$199 range. 

We do expect AAPL to move to the subsidized model and believe this is the right strategy to drive iPhone volumes. We believe consensus is looking for the subsidized price point on the 3G iPhone to fall in the $200-$300 range. To this point, we believe Apple shares could come under pressure if the device is announced with no carrier subsidy plan. RIM (RIMM-NASDAQ) shares, on the other hand, could benefit in this scenario. On the flip side, if the 3G iPhone is announced with a subsidized price point closer to $200 (or below) we would expect the shares to move higher with RIM’s shares likely selling off.

There you have it. While the geeks will be chattering about GPS and other features, the big money on Wall Street is looking at the subsidies, and any color Apple provides will be closely scrutinized.

Of course, if the dreaded double reverse pyschology takes hold, all bets are off.

Got it?
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$200 will provide stiff resistance

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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Positions

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