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I think most rational investors agree that the recent pullback in Apple shares is coming to a resolution. Maybe you are bearish for the long-term. (I know, the iPad mini sucks, the iPhone has issues, they cannibalize their own products, I've heard them all by now, so save that for stocktwits.) But if you believe that this is a typical October, when technology sells off, and the next six months may present a more favorable scenario for shareholders, then maybe you want to get long with options that provide the potential for huge returns if Apple merely returns to $700.

I am advocating two strategies, one using January 2013 calls, and one using March. Let's look at the January option chain:

AAPL call option chain:

570.00AAPL130119C0057000047.25Down 7.3046.5047.203805,472
575.00AAPL130119C0057500044.05Down 7.2043.4044.201074,914
580.00AAPL130119C0058000041.00Down 6.2040.7041.351,1626,270
585.00AAPL130119C0058500038.05Down 6.2038.0538.601912,954
590.00AAPL130119C0059000036.00Down 5.6135.2536.001,7717,517
595.00AAPL130119C0059500033.05Down 5.6532.7533.505595,020
600.00AAPL130119C0060000031.00Down 5.1030.8031.204,55055,376
605.00AAPL130119C0060500028.35Down 5.7028.3528.801,1609,902
610.00AAPL130119C0061000026.65Down 4.8526.4526.751,83810,546
615.00AAPL130119C0061500024.45Down 4.5524.0524.651,5626,913
620.00AAPL130119C0062000022.85Down 4.0222.4022.751,74711,917
625.00AAPL130119C0062500020.45Down 4.3920.4521.001,9118,496
630.00AAPL130119C0063000019.15Down 4.6718.8019.353,50114,732

I like simplicity when buying calls in this scenario. Essentially this is a swing trade with a three month time horizon. You can purchase the $595 January call (today's closing price) for 33.05. If Apple's share price retraces to $700 by the third week of January, this position will be worth at least $105, or a return of 217%. Not far fetched when you consider that these calls were worth more than $100 one month ago and $75 on October 16th.

This trade has a seasonal advantage. Technology stocks typically get hit hard in October, and run higher through April. Small caps almost have the same historical schedule of favorable returns.

Why I do not like call spreads is straightforward. You are trying to find the bottom in Apple near the 200 SMA. When the stock bounces, now that may be a good time to sell some calls. But why be underwater the short leg when you really don't have to. Furthermore, you can sell weekly options against this constantly to bring down your basis, a huge advantage in this trade. Any call sold above $595 will not cost you margin and is a calendar spread. Huge advantage when getting long calls in stocks that offer weekly options.

If you notice how Apple performed in 2012, you observe that the earnings call in January essentially caused an upside correction to over $600 from $380 in the January to March period. So lets look at March options:

570.00AAPL130316C0057000060.43Down 5.8258.3559.207614
575.00AAPL130316C0057500056.00Down 6.1555.5556.35825
580.00AAPL130316C0058000053.00Down 9.6552.8053.659155
585.00AAPL130316C0058500052.00Down 0.0650.2050.952332
590.00AAPL130316C0059000049.06Down 5.9447.4548.4062104
595.00AAPL130316C0059500045.60Down 5.9045.0545.95389
600.00AAPL130316C0060000043.15Down 6.8542.6543.60155257
605.00AAPL130316C0060500041.70Down 5.3040.3541.201241
610.00AAPL130316C0061000038.75Down 5.6038.3039.0544607
615.00AAPL130316C0061500037.05Down 5.4136.1536.9552533
620.00AAPL130316C0062000036.54Down 5.1634.2034.8557215
625.00AAPL130316C0062500033.50Down 4.2432.2532.951571
630.00AAPL130316C0063000032.60Down 2.8630.4031.0041163

Now at $595 you pay an extra $12 for that call, when in 2012 the stock moved up $200! If Apple repeats that pattern, these calls could be worth significantly more than $200 if Apple were to hit $800. Is this a far-fetched scenario? Certainly not. This implies a return of 350%.

Here is the key to these trades. You are not stuck in them until they mature. If Apple bounces in the somewhat near future, you will make a significant profit, should you choose to close out. Let's look at the January calls again:

The January $595 calls have a delta of .52. This roughly implies that the call will rise .50 for every $1 the stock rises. If Apple returns to $630 where it was just a few days ago, these calls will rise from $33 to $50, a 50% return. You can take that and run. (To the Apple store for a new Mac, I assume.)

So, if you believe Apple is due to finally go higher, the options give you multiples of return than the actual shares, without the risk of holding the entire stock price.

Source: How To Take Full Advantage Of Apple's Correction Using Option Leverage

Additional disclosure: I am long January $600 call options.