The frenzy over Apple’s (AAPL) newest must-have gadget, the iPad, is starting to really heat up.
Friday the company began taking pre-orders for the new e-reader/tablet computer, and judging by the response from early adopters, things are looking good for the iPad. According to some estimates, approximately 120,000 iPads were sold in the first 24 hours.
This early response, along with data confirming huge pre-launch demand for the device by the ChangeWave Alliance Research Network, could spell trouble for online retailer Amazon.com (AMZN).
The iPad, which is slated for release on April 3, looks as though it will make a serious impact on the e-reader market. According to a ChangeWave survey conducted in the aftermath of that Apple announcement (Feb. 1-10), demand for the iPad among respondents is going to negatively impact sales of Amazon’s Kindle, as well as other competitors in the e-reader market.
The survey found that the iPad is all but certain to have a transformational impact on it the e-reader space.
Among respondents who already own an e-reader, Amazon’s Kindle (68%) was the dominant brand. Yet, when asked if they would have purchased their current e-readers if iPad would have been available, more than 27% of respondents said they would have purchased Apple’s device.
When it comes to future market share, the survey results were really impressive for the iPad. When asked about their planned e-reader purchases over the next 90 days, the survey shows the Apple iPad is now poised to capture an incredible 40% of the e-reader market going forward in the first 90 days after its launch.
This survey suggests Amazon could find itself playing catch-up within just a few quarters, especially if they don’t move quickly to upgrade the Kindle.
For options traders, the iPad frenzy, which is likely to ramp up over the next several weeks in front of the April 3 release, might just translate into an opportunity to profit by shorting Amazon. Getting in on a short trip down the Amazon could be accomplished via traditional short-selling methods, but the easier way is to buy April put options.
With Amazon shares currently trading in the $130 range, a slightly out-of-the-money put such as the AMZN April 125 Puts (QZN 100417P00125000) could be a way to get some big gains if iPad news causes Amazon to sell off.
I like this play so much I chose it to be my entry for the OpionsZone 2010 March Madness Trading Contest. Check out the rest of the trades from our top advisers here.
Related Articles:
- Sweet 16 Option Trades
- The Best Way to Short Stocks
- How to Dodge the SEC’s New Short-Selling Restrictions
3 Secrets to Quicker, Bigger Global Profits
Learn how to target the next winning global stocks in three easy steps — without the risk. Plus, the best red-hot China stock to buy now. Download your FREE investing guide here.
