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By John Critchley & Christopher Yip

As the bulls and bears volley back and forth for control of the market, there is another battle taking place high in the clouds. With Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) clouds' already vying for market share, Apple joins in the dogfight early in June, announcing the iCloud at their Apple Worldwide Developers Conference. While Apple certainly built a lot of buzz around the release of their cloud, it was not enough to convince prospective users that Apple would take the lead. Many technology experts are taking a magnifying glass to how the different services actually differentiate themselves with the product. While there are definitely differences between the different data storage services, it is becoming clear that the three tech giants are geared up to chase not only small businesses with data needs but also music listeners with large libraries.

Apple's iCloud attempts to make small tweaks to the idea of the cloud, refocusing on what they believe the customers will want and find useful. One of these unique tweaks is that the iCloud can be downloaded to any Apple device as an app, including but not limited to Macbooks, iPods, iPads and iPhones. The attractive part of this app is that it will automatically sync new content on any single device up to the cloud and be able to send the content back down to multiple receiving devices. Similar to Amazon's cloud deal, the iCloud will be offering the first 5GB for free. Any new songs or media purchases from the respective app stores will not be deducted from the existing storage space remaining.

As with most Apple products, this service is exclusive to devices with the Apple operating system: different versions of iOS. But the trade up is that users do not have to manually upload content up to the iCloud. If they choose to use iTunes Match for $25 a year, the program will even automatically scan iTunes and send any new songs up to the cloud. Conversely, both Google and Amazon clouds require the user to manually upload songs to their clouds. Google requires the user to download a music manager and Amazon requires the user to use an Adobe application. Amazon's upload speed has been clocked in at a shockingly slow 65kb/s, inferring an upload of 5GB worth of music will require more than 20 hours of upload time.

AAPL shares are currently trading at a P/E multiple of 15.38, trading around $335.60 at the time of writing this article. This multiple is curiously low, leaving many in the investment community scratching their heads wondering why AAPL is not trading above $400.00. For comparison of P/E multiples, AMZN is trading at a jaw dropping 82.96 and GOOG at a more reasonable level of 18.91. With the recent streak of stocks breaking support and making 52 week lows, it is possible these P/E's will retrace back to more favorable levels should the stocks continue pushing lower. From a technical perspective, AAPL currently has upward momentum behind the recent leg up but is lacking in strong volume. The MACD histogram is about to go positive with stochastics above 50 poised to touch 80.

As the tug of war between the bulls and the bears continue, ultimately moving the market sideways for now, we have strategies that will satisfy your appetite whether you expect a bull run to emerge or a bear to come out of hibernation:

Options Plays

With AAPL trading in a relatively tight range for the past few months, the 30 day implied volatility of the options is quite distant from its 52 week highs. The 30 day implied volatility is trading around 25.94%, significantly less from the 52 week implied volatility high of 45.64% hit last year.

Let's take advantage of these reasonable implied volatilities to either initiate a brand new short position or to speculate on a bullish summer run in AAPL.

Trade idea #1 -A Bearish Options Play

This may be an advantageous time to initiate a bearish position through some put plays as the depressed 30 day implied volatility is normally a bearish sign indicating contentment and complacency in the marketplace. This sentiment can be quite harmful as it often fosters a false sense of security for the individual investor.

To find any reasonable implied volatility option plays, one must go out at least to the Aug '11 options, which present some interesting medium term value. With AAPL earnings set to be released on July 21st after regular July expiration, the purchase of August options allows us to participate in any post earnings underlying activity.

The play: To take advantage of normal downside implied volatility skew and to benefit from any continuing downward selling momentum in AAPL.

a) Buy August 320-300 put spread for $ 4.20. Receiving about 2.1% in Implied Volatility skew (buying 27.3 IV vs. selling 29.4 IV)

To finance this spread:

b) Let's sell the August 365 calls @ 3.30. This is approximately a 24.5% Implied Volatility.

Net debit: $.90

Why the August 365 line? The 52 week high in AAPL was $364.90 reached on 2/16/2012. If your bearish view is incorrect, you still may be able to get away with being short some upside calls as you only start to feel some real pain if AAPL makes new highs. A bullish run up may not be so harmful if the tech behemoth doesn't breach its all time highs.

Risk: You will be Short the stock over $365, which will require an 8.9% upward move in AAPL over the next 7 weeks.

Trade idea #2- A Bullish Options Play

For the true believers who view this recent selloff in AAPL as a buying opportunity, the depressed 30 day implied volatility allows for cheap upside speculation.

In order to accomplish this, one can go to the Aug '11 options, which present quite compelling medium term speculation value. Remember, this play also allows you to benefit from a possible positive earnings announcement in late July.

Trade idea -

The play: To capitalize on the depressed implied volatility in AAPL's call options.

a) Outright Buy Aug 355 calls @ 5.65 Buying 24.6 IV is cheap for 7 weeks of upside plus an earnings release. This implied volatility purchase may appear to be much higher than the near term weekly July and regular July expiration options, but remember there is earnings announcement premium factored ( already priced) into these options.

To finance this purchase:

b) Let's sell the August 300 puts @ 3.10 This is approximately 29.4% implied volatility. You are selling implied volatility in these puts at a significant skew premium to your call purchase. This is very normal and standard option pricing behavior. Let's take advantage of the elevated downside implied volatility in these options to lessen the debit of our call purchase.

Net debit: $2.55

Risk: You will have AAPL stock put to you @$300. In other words, you will be long and own the stock at $300 if AAPL trades below $300 and you are assigned the puts. A 10.6 % downward move in AAPL over the next 3 months.

Stay tuned ...

Notes: Prices quoted are accurate at the time of writing and are subject to change after submission to Seeking Alpha.

Disclaimer: We are not liable for any trading decisions made by any reader. NO advice is given or implied. The information offered in this article is for demonstration purposes ONLY and should not to be either construed as an offer or considered to be a recommendation to buy or sell any options.

Your use of this information is entirely at your own risk. It is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with a professional broker, or financial planner and make your own independent decisions regarding any trades mentioned herein. This is not a solicitation to buy or sell any options, or to purchase or sell any credit spreads. Trading options only carries a high degree of risk, is not suitable for all traders/investors and you may lose all of your premium money invested in the options. If you have never traded options before, we strongly recommend that you read a little background information made available by the government. Only you can determine what level of risk is appropriate for you. Also, prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options.

Past performances DO NOT guarantee future results. Please consult with your own independent tax, business and financial advisors with respect to any trade. We will NOT be responsible for the consequences of anyone acting on this purely demonstration material.

Disclosure: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.

Source: Options Plays on Apple's iCloud