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Apple Inc. (AAPL) Bearish Betting Approaches Annual High

Put buyers have taken an increased interest in Apple Inc.

by 4/14/2014 10:57 AM
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Options bears have been slowly asserting their dominance in the Apple Inc. (NASDAQ:AAPL) options pits in recent weeks. In fact, put-buying activity has rarely been as prominent on the iPhone parent. Specifically, over the last 50 trading days, roughly 1.07 million puts were purchased to open on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to 1.48 million calls. The resultant 50-day put/call volume ratio of 0.72 stands at a new annual high. For comparison's sake, this ratio stood at 0.50 at the end of 2013.

Echoing this trend, Apple's Schaeffer's put/call open interest ratio (SOIR) has risen sharply during the last couple of months and currently stands at 0.85, or 1 percentage point away from an annual high. In simpler terms, the short-term options crowd has rarely been so put-focused during the last 12 months. What's more, the gamma-weighted SOIR of 1.16 suggests that put activity is even more prevalent among near-the-money options.

Recently active bears have also been willing to open their wallets to place these bets, as far as volatility is concerned. The stock's 30-day at-the-money implied volatility measure bottomed out in mid-March, but recently hit its highest point since late January.

While the speculative crowd has taken a clear turn toward the bearish camp, Wall Street continues to wave the bullish flag. Of the 37 analysts following the tech heavyweight, 28 have named it a "buy" or better.

On the charts, Apple stock has dipped roughly 7.5% in 2014 to its present perch of $518.56, but is clinging to a year-over-year gain of more than 20%. The shares are currently trading around their ascending 160-day moving average, a trendline off of which AAPL bounced in mid-September and late January. If the stock manages to turn higher from this area, some of the recent option bears could be forced to capitulate. Such a shift might result in contrarian tailwinds that could be positive in the short term for the shares.

So far in today's session, the 10 most active Apple Inc. (NASDAQ:AAPL) option strikes are April calls and puts that will expire at the close of Thursday's trading. April expiration occurs before Apple reports quarterly earnings after the close next Wednesday, April 23. The company has topped analysts' bottom-line estimates in the past five consecutive quarters, by an average of 26 cents per share.


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