Exactly one week ago, Apple (AAPL) CEO Tim Cook unveiled two new iPhones in a presentation at company headquarters in Cupertino, California.

More so than for other Apple launches was the certainty with which various tech bloggers and pundits were reporting the nature of the release (two iPhones, one cheaper and multi-colored).  Perhaps it was Apple’s glib reaction (a subdued ‘you got us’) that inspired the Onion’s (disturbingly accurate) headline, Apple Reveals Panicked Man With No Ideas.

MARKET RECAP
In an interview recapping the event, I said to BNN’s Michael Hainsworth “The only way this event could be worse for Apple would be if they had actually unveiled an iWatch.”  Shares fell nearly 4.5 percent by the end of the following day’s session, and are now down 9 percent since the September 10 product launch.  The stock had been trading $456 prior to a series of tweets from Carl Icahn, who is projecting the stock to hit $600 in 2014.

NEARING OVERSOLD LEVELS
Following Monday’s three plus percent sell-off, the stock is approaching oversold territory via the relative strength index (14 day RSI= 35.05), presenting a longer-term trading opportunity.  I like the Jan 15 450-550 Bull Call Spread at $29.25 – the stock doesn’t even have to reach its recent $509.71 high to hit break-even ($479.25).  Despite my recent negativity, I believe Apple’s outlook is bright in the medium-term. 

Prior to iPhone 5s/5c release, Apple followed a well-known formula for its Phone releases.  Launch a redesign (iPhone 3, 4, and 5), followed by a same-style phone with improved components like a better processor, camera, etc. (3s, 4s, 5s).  In doing so, the company would have up to 3 phone models available in its stores simultaneously (the 3s, 4, and 4s). 

Consumers might opt for the less expensive ($99, like the 5c) but outwardly identical iPhone 4 over the more costly ($199) iPhone 4s.  With the discontinuation of the iPhone 5 and the release of the 5 and 5s, Apple has attempted to segment its customer base to a greater degree.  Business users and professionals will gravitate towards the fast (64-bit) and secure (finger-print protected) iPhone 5s, while younger consumers (teenagers, college students) and emerging markets will naturally fall more towards the 5c.

Shortly after 4 pm EST Bloomberg reported China Unicom, the nation’s second largest carrier, announced combined reservations for the iPhone 5c/5s had exceeded 100,00 units. 

LOOKING AHEAD
I believe there is a strong likelihood Apple will release its iWatch in the next 12 to 18 months, but with one catch: the iWatch isn’t a smart wristwatch (the Samsung product that will almost surely put up Microsoft Surface-like sales numbers), but instead a television set.

GOOD RISK/REWARD
I like this trade because it offers good return on my money (nearly 3:1), and my upside target is still $50 short of Icahn’s.

MY TRADE
Buy the AAPL Jan 15 450-550 Bull Call Spread for $29.25
Risk: $2925 per 1 lot
Reward: $7075 per 1 lot
Break-even: $479.25

GREEKS OF THIS TRADE
Delta: Long
Gamma: Long
Theta: Short
Vega: Long