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Apple Inc. (AAPL) and $600: Back Together Again

Apple Inc.'s weekly 5/9 600-strike call is in focus today

by 5/5/2014 3:05 PM
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Option Brief: Apple Inc. (NASDAQ:AAPL) came within striking distance of the $600 mark today -- topping out at an intraday high of $599.35 -- before easing back to its current perch at $598.58. Although a move north of this round-number level has eluded Apple since November 2012, a number of optimistic option traders in today's session are betting on the equity to take out this area by week's end.

All 10 of AAPL's most active options today expire in two weeks or less, causing the stock's 30-day at-the-money implied volatility (IV) to rise 4.4% to 19.2%. The most popular option by a mile, though, is AAPL's weekly 5/9 600-strike call, where 23,811 contracts are on the tape. (As a point of comparison, the next most active position has seen about 10,200 contracts change hands.) A healthy portion of the weekly calls have traded on the ask side, IV is up 2.1 percentage points, and volume outstrips open interest, collectively pointing to the purchase of new positions.

These calls are being scooped up for a volume-weighted average price (VWAP) of $2.95, making breakeven at Friday's close $602.95, or the strike plus the VWAP. Should the equity remain pinned beneath the strike price through week's end, however, the most the speculators stand to lose is the initial cash outlay.

As noted, though, the stock came close to toppling this strike price earlier, thanks to an early morning price-target hike at RBC. This upward momentum only extends the equity's recent run higher, with shares of Apple Inc. (NASDAQ:AAPL) up more than 14.1% from their pre-earnings April 23 close of $524.75.


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