Zimmer's shares, knocked down by an industry faux pas, could climb by more than 25%, as demand builds and the company launches innovative products.

Although Shire shares have already dropped, they could fall another 15%-20% if the drug maker can't keep it's grip on the attention-deficit hyperactivity disorder market.

If eager or compelled to purchase some "upside risk" in the financials area, one could do far worse than nibble on American Express (AXP). When Buffett-blessed Dow components become this deeply out of favor after falling by 30% in a year, they merit a look. Yes, it has substantial consumer-credit exposure; loan losses will grow. Its investment portfolio owns some stressed paper. And selling card receivables won't be easy for a while. Yet at 13 times expected '08 profits, it's at a rare discount to the indexes and shares a multiple with the pure bank J.P. Morgan Chase (JPM). A quarter of profits are from networks comparable to MasterCard (MA), whose earnings the market happily capitalizes at a 30 multiple. Buying AmEx here at 44.66 could prove early in time or price, but probably not by a punishing margin.

At 68, the shares have rallied 161% since Assurant was spun off from Fortis in 2004, but there's still more upside as the housing market continues to weaken: May's foreclosure filings were up 48% from a year ago, according to RealtyTrac. Today, the stock trades at 10.4 times projected 2008 earnings -- no pricier than the 10.6 times commanded by its slumping peer group. At the least, Assurant is a good hedge against further housing weakness, especially for bottom-fishers combing the financials' murky depths.

Lehman's options premiums show that investors think the stock is more than twice as risky as the overall financial sector. True, investors are hedging Lehman's credit-default swaps with puts, and that does lift volatility, but volatility is too high to blame cross-asset trading strategies. Investors are mostly buying put spreads to profit from further stock declines, and this seems the best approach. Others are paying top dollar for straddles because they don't know if the stock will rise or fall. Some investors are so confident that Lehman's stock will decline that they're selling two puts for each one bought. One notable trade involved buying 5,000 July 20 puts and selling 10,000 July 15 puts.

Now, for the caveats: Apple stock after a miserable period early this year, has come roaring back. It went from under $120 to $180; after selling off a bit last week, it's now in the low 170s. With the phone delivered, the pressure will be on to deliver big numbers at the launch, and then to come up with the next big thing after that. (Apple fans demand to have something to look forward to.) And the effective lack of phone sales in June, as buyers await the new model, could hurt current-quarter results. But what really worries me is the factor that pressured the stock last week: concern about the health of Steve Jobs. More than any other company, Apple is viewed as a creation of its CEO; it's a cult of personality. And, as I noted on my blog last week, many attendees at the developer conference's keynote-address session were taken aback by Jobs' gaunt appearance.

Apple's aggressive pricing puts it on a collision course with phones from a host of other players. This seems like very bad news for weaker hands like Motorola (MOT) and Palm (PALM).

Apple's aggressive pricing puts it on a collision course with phones from a host of other players. This seems like very bad news for weaker hands like Motorola (MOT) and Palm (PALM).