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iPhone 5 No Reason to Buy Apple: Pro

Apple surged $15 in late trade after the tech titan lifted the curtain on the updated iPhone 5, a slimmer device billed as 20 percent lighter than its predecessor, with a four-inch display, faster processing time and sharper color resolution.

The update comes with iOS 6, the sixth iteration of Apple's operating system that also runs on its other digital devices.

It also includes an improved camera — an eight megapixel sensor with backside illumination and more rapid ability to capture photos using a panorama function that "sweeps" the scene.

The new iPhone costs $199 for a 16 gigabyte version; $299 for a 32GB, and $399 for a 64GB unit. Those prices will be offered with a 2-year contract with a cell phone provider.

Although the stock rallied after the gadget introduction, BGC Partners analyst Colin Gillis says don’t follow the crowd. “The smartphone market is slowing, expectations are white hot for the iPhone and there are still 8 million iPhones in the channel.”

Also Gillis says, "I think we saw peak margins a couple quarters ago, margins are going to be lower going forward. And if Apple releases an iPad mini it will cannibalize iPhone 5."

Gillis has a Hold rating on the stock with a $600 price target.

Trader Joe Terranova, chief market strategist for Virtus, sees it differently. “The look and feel of the new iPhone appears to be significantly different,” he says.

Terranova believes the changes are significant enough to prompt the Apple faithful to buy a new phone. “I hold the stock and believe in the long-term fundamental story,” he says.

If you’re looking to play the stock in either direction, trader Dan Nathan, editor and co-founder of, suggests placing your bets with options. “It makes sense to define your risk in a story that’s so over-owned.”

Posted by CNBC's Lee Brodie

Read More from Fast Money:

> Fast Money’s Favorite Dividend Yielders
> Top Secrets of Pro Traders
> 10 Top Stocks for the Long-Term Investor

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Trader disclosure: On September 12, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long BAC CALL SPREADS; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long GOOG; Karen Finerman is long COH; Karen Finerman is long SPY; Karen Finerman is long IWM; Karen Finerman is long MDY; Joe Terranova is long VRTS; Joe Terranova is long WFM; Joe Terranova is long SWN; Joe Terranova is long AAPL; Joe Terranova is long QCOM; Joe Terranova is long TRV; Joe Terranova is long VZ; Joe Terranova is long VLO; Joe Terranova is long CSTR; Joe Terranova is long CHKP; Joe Terranova is long EMC; Joe Terranova is long NXPI; Joe Terranova is long AAPL Sept. $655 puts; Joe Terranova is short AAPL Sept. $640 puts; Brian Kelly is long GLD; Brian Kelly is long EWG; Brian Kelly is long DOX FUTURES; Brian Kelly is long CORN; Brian Kelly is long WHEAT; Brian Kelly is long SOY; Brian Kelly is long JJ; Brian Kelly is long GRJA; Brian Kelly is long DBA; Dan Nathan is long AIG Jan 35/40 call spread; Dan Nathan is long MSFT Oct. 30/28 put spread; Dan Nathan is long AAPL Sept./Oct. 700 call spread; Dan Nathan is long GS Sept. 90/80 put spread; Dan Nathan is long SBUX Sept. 47 puts; Dan Nathan is long FB Nov./Jan. 22 call spread with wires.