Leverage Alert: Apple

LEVERAGE ALERT

FRIDAY, JANUARY 7, 2005
NEW RECOMMENDATION!

PLACE A DAY-LIMIT ORDER TO BUY (TO OPEN) THE APPLE COMPUTER APRIL 60.00
CALL (AAQDL) AT A MAXIMUM ENTRY PRICE OF 10.20 OR LESS.

*** IF YOU ARE UNABLE TO ENTER THIS POSITION BEFORE THE CLOSE TODAY, WE
RECOMMEND THAT YOU REPEAT THIS PROCEDURE THROUGH THE NEXT TRADING DAY. DO
NOT ATTEMPT TO GET INTO THIS TRADE AFTER THE NEXT TRADING DAY’S CLOSE. ***

THIS OPTION IS CURRENTLY BID AT 9.80, OFFERED AT 10.00.

AAPL IS CURRENTLY TRADING AT 65.85.

DO NOT PLACE A GOOD-TIL-CANCELLED ORDER TO EXIT THE POSITION UNTIL WE
FOLLOW UP WITH FURTHER INSTRUCTIONS, AS WE MAY ALLOW PROFITS TO RUN IF OUR
INDICATORS SUGGEST THE POSITION HAS MORE PROFIT POTENTIAL.

NEVER PAY MORE THAN THE MAXIMUM ENTRY PRICE FOR THIS OR ANY OTHER
RECOMMENDATION. DO NOT INVEST MORE THAN 10%-20% OF YOUR AVAILABLE CASH
ALLOCATED TO THIS PROGRAM IN ANY ONE TRADE.

YOU WILL NOT RECEIVE FURTHER COMMUNICATION CONCERNING THIS TRADE, INCLUDING
CLOSEOUT INSTRUCTIONS, IF YOUR SUBSCRIPTION IS NOT ACTIVE AT THE TIME WE
ISSUE FOLLOW-UP INSTRUCTIONS.

LEVERAGE ALERT COMMENTARY
RECOMMENDED ON FRIDAY, JANUARY 7, 2005


APPLE COMPUTER (AAPL) TRADE DRIVERS:

* In broker activity today, First Albany lifted its first-quarter and 2005
earnings estimates for AAPL to 50 cents per share and $1.68 per share,
respectively. The firm cited an expected jump in iPod sales and coming
announcements of a flash-based iPod and a less expensive Mac for the move.

* In response to the news, AAPL surged approximately seven percent, taking
out resistance at the 65 level in the process.

* Pulling back to longer-term picture, AAPL has been in a pronounced
uptrend for the past two years. The shares continue to rally along support
at their 10-week and 20-week moving averages, which the stock has not
closed a week below since late December 2003.

* Despite this impressive performance, investors remain skeptical of AAPL.
The stock's Schaeffer's put/call open interest ratio of 0.71 ranks above 78
percent of those taken in the past year.

* Wall Street is even shunning the shares, as 10 of the 18 covering
analysts still rate AAPL a "hold" or worse. Any upgrades from this bunch
of hold outs could further the equity's rally.

* Finally, this combination of solid technical performance and heavy
pessimistic sentiment has earned AAPL a Schaeffer's Equity Scorecard rating
of 7.0 out of 10.0, indicating that the security could have more room to
run as pessimism unwinds.
REVIEW OF RECOMMENDATION: Buy the Apple Computer April 60 call (AAQDL) at a
maximum entry price of 10.20. We will closely monitor this position and
contact you immediately with updated instructions should our expectations
change.
CURRENT OPEN POSITIONS: Delta Air Lines January 2005 5.00 call (DALAA);
Fannie Mae January 2005 75 put (FNMMO) partial position; iShares Lehman 20+
Year Treasury Bond Fund January 2005 88 call (TLTAJ); Urban Outfitters
March 40 call (URQCH); Wynn Resorts March 65 call (UWYCM); Amazon.com
February 45 put (ZQNNI). The TASER International February 27.50 call
(QURBY) was closed today.

You will not receive further communication concerning this trade, including
closeout instructions,
if your subscription is not active at the time we issue follow-up
instructions.
©Copyright 2005 Schaeffer’s