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Pros On How to Trade Apple Ahead of Earnings

Amid talk of Apple dividends, an iPad 3 release date and strong holiday sales ahead of after-the-bell earnings results, the “Fast Money” pros looked at the best way to trade this stock.

“If you took at the iPhone sales that have come through Verizon and AT&T, they’re actually very, very strong,” trader Stephen Weiss said Tuesday. “I continue to sell out-of-money puts, near-term, and you catch the premium because the volatility in the stock can be so large that it’s a great way to make money.”

Weiss saw continued upside as Apple releases a 4G version of the iPhone.

“As far as the stock, I think you want to continue to own it long-term,” he said.

Qualcomm, which is one of Apple’s suppliers, was also another stock with potential upside on strong sales of Apple’s iPhone and iPad.

Apple shares closed down 1.62 percent at $420.51.

Contrarian Steve Cortes thought it best to stay on the sidelines.

“I have no position, and it’s going to stay that way,” he said. “To me, Apple is sort of a no-man’s land here. The momentum has been much too strong for me to short the stock, but it is also far too loved for me to get in and buy it.”

Trader Joe Terranova thought it could be time to pull the trigger on buying in the next couple of days — not just in Apple, but in suppliers such as Broadcom and Cirrus Logic, which counts on the iPhone for half of its sales.

Terranova cited one name to avoid, however: Nuance Communications, the company behind the iPhone 4G’s Siri voice-recognition assistant.

“The stock has made its run,” he said. “It’s exhausted.” Retail expert Patty Edwards said she would add to her positions in the event of a pull-back.

“I think this thing will do better than expected,” she said.

Peter Misek, senior technology analyst at Jefferies, said he estimated iPhone 4S sales to top 33 million units and expected guidance to be in line with Wall Street figures. But given Apple conservative approach, that would be strong.

Misek said he expected Apple to launch its much-anticipated iPad 3 in March, and he did not believe the company would announce a dividend – yet.

“That’s unlikely. We’d love to see it,” he said, but added that it could happen eventually. “We think a dividend is certainly a higher probability event this year.”

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Trader disclosure: On Jan. 24, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova owns AXP; Terranova owns F; Terranova owns APC; Terranova owns WFM; Terranova owns OXY; Terranova owns XOM; Terranova owns TRLG; Terranova owns SBUX; Terranova owns JNPR; Terranova owns VRTS; Terranova owns IBM; Terranova owns LQD; Terranova owns SU; Terranova owns SJM; Terranova owns BRCM; Terranova owns MUB; Terranova owns EMC; Terranova owns CSCO; Terranova owns V; Terranova is long UNG April $5 puts; Edwards is long AAPL; Edwards is long GLD; Edwards is long MSFT;

Edwards is long INTC; Edwards is long MCD; Edwards is long JNK; Edwards is long BMY; Edwards is long WLT; Edwards is long QCOM; Edwards is long GWW; Weiss is long AAPL; Weiss is long RIMM; Weiss is long VZ; Weiss is long QCOM; Weiss is long BRCM; Weiss is long EUO; Weiss is long CSC; Weiss is long GM; Weiss is long F; Weiss is short V; Weiss is short WLT

For Peter Misek
Jefferies & Company, Inc makes a market in the securities or ADRs of Apple Inc.

For Ben Schachter
No disclosures

For Todd Gordon (PM)
Gordon is short EUR/NZD

For Sara Senatore
(MCD): I, Sara H. Senatore, Senior Analyst(s)/Analyst(s), certify that all of the views expressed in this publication accurately reflect my/(our) personal views about any and all of the subject securities or issuers and that no part of my/(our) compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views in this publication.

For Mark Schoenebaum (JB)
Merck (MRK): Neither ISI nor its affiliates beneficially own 1% or more of any class of common equity securities of the subject companies referenced in the Report. No person(s) responsible for preparing this Report or a member of his/her household serve as an officer, director or advisory board member of any of the subject companies. No person(s) preparing this report or a member of his/her household have a financial interest in the subject companies of this Report. At various times, the employees and owners of ISI, other than those preparing this Report, may transact in the securities discussed in this Report. Neither ISI nor its affiliates have any investment banking or market making operations. No person(s) preparing this research Report has received non-investment banking compensation form the subject company in the past 12 months. ISI does and seeks to do business with companies covered in this research Report and has received non-investment banking compensation in the past 12 months. DISCLAIMER: This material is based upon information that we consider to be reliable, but neither ISI

For Colin Sebastian
Zynga (ZNGA) The senior research analyst(s) certifies that the views expressed in this research report and/or financial model accurately reflect such senior analyst's personal views about the subject securities or issuers and that no part of his or her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in the research report. Baird prohibits analysts from owning stock in companies they cover.

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