Apple Bulls: Has David Einhorn Ever Heard Of Steve Jobs?

| About: Apple Inc. (AAPL)

Yesterday on Seeking Alpha, I showed how the following Apple (NASDAQ:AAPL) option trades would have worked out for you, as of intraday Thursday, had you entered them just ten days prior:

  • Short 1 May $565 put (loss of approximately $1,900).
  • Long 3 October $530 calls (loss of approximately $5,025).
  • Long 7 October $700 calls (loss of approximately $3,395).

Judging by the comments' section of that article, it seems that a handful of readers (not you, of course) do not understand the meaning of words such as "counterintuitive" and "simulated."

I did not make any of the trades listed in real-life. They took place in a fake (simulated) trading account that I use to help create learning experiences. In that account, I often go against my own instinct (that's counterintuitive behavior) to prove points, test hypotheses and just make things more exciting. I feel like I have been quite clear about this through the entire exercise.

In any event, AAPL bounced a bit during Friday's trade. Does that mean it's time to jump into the same type of trades I knew I had no business entering roughly two weeks ago? Say, an AAPL June $510 short put and a handful of AAPL October long calls with $500 and $600 strikes.

Rock star David Einhorn would probably trash a hotel room and respond with "Hell, yes!" Seeking Alpha contributor Bill Maurer (no relation to Bill Maher) wonders if the Einhorn effect is getting out of hand. I tend to agree with Bill's assessment that it is.

Through Einhorn's entire spiel, I do not think he mentioned the name Steve Jobs once. Of course, his notion that Apple is really a software company that merely makes billions of dollars selling high-margin hardware meets with cheers from Apple permabulls. Give the people what they want! But it does not hold much water.

Yes, Steve Jobs (though I did not catch Einhorn giving him credit, but I was not present at the Ira Sohn conference so I might have missed it) put together a fantastic ecosystem with iTunes, the App Store and iCloud. But that content and the entire operating system Jobs put together would be worth nothing without the beautifully-designed and Jobs-created devices that provide access.

You cannot have a conversation about Apple's future without talking about its past. While AAPL permabulls are sick of hearing it, they'll look back on how they wrote Steve Jobs off like another dime a dozen CEO with regret. It many ways they damn the man's legacy.

So, no, don't buy the bounce unless you're a nimble trader. AAPL might burst past $600 again, but, if the actions of the longs I heard from the last time the stock traded that high serve as a reliable indicator, I am not sure longs have the discipline to take profits. They'll keep holding out hope for $700, as the stock retraces back down towards $500.

Until Tim Cook proves he can execute even half as well as Steve Jobs did with a brand new product (e.g., iTV) and not butcher the ones Jobs left behind (think, with horror, mini-iPad and cheap Macbook Air), investors who cannot control their Apple love should probably stay on the sidelines.

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