You'd think that I would be dreading this assignment. I mean, really, how could anyone defend Apple's (NASDAQ:AAPL) share price? It's richly valued by almost any measure. The company is in the midst of a transition to Intel (NASDAQ:INTC) chips that necessitates the rewriting of classic Mac software. And anything but glorious news induces minor selling fits among investors. How in the world could this be a good stock? Answer: It may not be. But that's not what this duel is about.

Let me repeat that, because it's important. This duel isn't about whether or not Apple is a good stock. Instead, it's an attempt to answer two simple questions: Can you, the Foolish investor, make money with Apple? And will your returns have a high likelihood of beating the market? Yes, and yes.

Can lightning strike three times?
Why? Because Apple has done it before. Twice, in fact. Have a look at this chart and you'll understand what I mean. See the periods from 1986 to 1988 and from 1997 to 1999? In those three-year spans, Apple's stock tripled ('86 to '88) and nearly quintupled ('97 to '99). Today, the Mac maker is in the middle of a three-year run that began in early 2004.

That's not to say that Apple's stock is guaranteed to keep rising for another 11 months. Apple's shares have already risen more than sevenfold since January 2004, which means the stock has been trading in uncharted territory for a while now.

The golden apple
But why does that have to be bad? Doesn't Apple deserve a premium? Absolutely. At no time in its history has Apple ever had 70% market share of anything, even with the original Mac. But that's what it has with the iTunes Music Store. And the iconic iPod took more than 30% of the total market for digital music players in 2004, when it sold 8.4 million units, according to researcher In-Stat. For those keeping score, Apple sold more than 14 million of the devices in the recently completed first quarter.

And there's no sign of demand slowing. Indeed, Jupiter Research said in April that there would be 56 million MP3 players in the world by 2010, and that 2005 sales would reach 18.2 million units. Both projections looked positively rosy at that time -- but no longer, thanks to the iPod.

Still, Jupiter's projection is instructive, if only because 56 million isn't a lot, especially if you're talking about the world. Think about it. We're a planet of 7 billion people, more than half of whom are becoming more technologically astute. (I'm including China and India, of course.) Which means, Fool, that this market still has a looooong way to go before it's saturated.

PowerPC? Meet Mactel
History is less kind when it comes to Apple and chip platforms. Flash back to 1993 for a moment. That's when Apple made the switch from its original architecture to the PowerPC platform, the one it's now abandoning for Intel. The performance gains appeared attractive at the outset, but it took a while for many key software programs to be updated, including Microsoft's (NASDAQ:MSFT) popular Office suite. Yet that didn't stop demand for the new computers. In fact, Apple couldn't keep up. According to the online archive, the Mac maker had more than $1 billion in backorders for PowerPC Macs by June of 1995.

Those should've been glorious days. Instead, they were marred by manufacturing issues and the rollout of Windows 95, which took another step toward emulating the Mac's noted user interface. Cynics will undoubtedly point out that Apple is transitioning to Mactel in the same year as the release of Windows Vista. But the coincidences end there, Fool. First, no one knows when the perennially delayed Vista will make its appearance. Second, most Mac components are now held by suppliers, and Intel is as ruthlessly efficient at computer-building as anyone in the industry. This isn't the struggling adolescent Apple of the '90s. This is the adult and more responsible Apple.

Your option to profit
Of course, you didn't come here looking for a history lesson. You want a profit plan. I've got one, but it requires that you embrace the wild and woolly world of stock options. If you want to take a moment to familiarize yourself with the concepts I'm about to discuss, take a gander at fellow Fool Jim Fink's excellent overview here. Go ahead, I'll wait. (Tapping feet.)

Ready? OK, great. We're going to sell a March 2006 put option with a strike price of $65. In return, we'll get a premium of $90 ($0.90 x 100 shares, or $90). Here's what that means in Foolish terms: We're writing a contract that someone has bought. It says, in effect, that they have the right to sell us 100 Apple shares for $65 each. We, in turn, agree to buy them. And we get paid $90 for that guarantee. Still with me? Good.

There are two ways we can win in this situation and one way we can lose. Let's cover how we can lose first. If Apple's shares drop more than 15%, to below $64.10 per stub, we will be accepting the shares at a loss. But if they climb or do nothing, we keep 100% of our premium.

There is one additional price for this benefit, however. It's called the margin requirement. Brokers demand that we have available cash to fund the purchase of 100 Apple shares, in the event they are "put" to us. In this case, the requirement is a portion of the total, or $1,775 (broker margin requirements may vary). So the return on the March put is $90/$1,775, or 5%. If that makes your head hurt, think of it this way: As long as Apple's shares don't fall below our mandated buy price of $65, we're earning a 5% dividend. In two months. That's 30% annualized.

And if the shares are put to us?
I know what you're thinking: What if the shares get put to me? Good question. There's no reason to employ this strategy unless you'd be comfortable holding 100 Apple shares at a lower price. Let me repeat that, because it's important: The downside with selling puts is that you could end up owning shares. So, please, don't sell 10 put contracts of anything unless you're ready to hold 1,000 shares of that stock.

Foolish caution aside, this is still a highly attractive trade. The odds favor your collecting a generous short-term return. But if the shares are put to you, it's worth noting that, at $64.10 per stub (to account for the $0.90 per-share premium), Apple would trade for 29 times this year's earnings and 24 times fiscal 2007 income. That's a decent deal, especially for a firm expected to grow the bottom line by more than 48% this year and 22% next.

Think different
Apple has proven to be one of the great businesses of the decade thus far, and there may be much more to come. But Apple's risky valuation makes betting on the future difficult for anyone who doesn't bungee-jump for a living.

Fortunately, investing isn't (usually) a zero-sum game. There are ways to profit from any stock, including Apple. Put options may be the best choice of them all. With them, Fools can profit from others' greed, get paid for attractive buy-in prices, and generate market-thumping returns in the process. What's not to like?

Wait! You're not done. This is just a quarter of the Duel! Don't miss the bearish opening argument, as well as the bull and bear rebuttals. Even when you're done, you're still not done. You can vote and let us know who you think won this Duel.

Fool contributor Tim Beyers counts not buying Apple as one of his greatest investing mistakes. He still doesn't own shares in the Mac maker, nor in any of the other companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile . Microsoft is a Motley Fool Inside Value pick. The Motley Fool has an ironclad disclosure policy .