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Option Brief: Apple Inc. (NASDAQ:AAPL) shares have been relatively quiet in March, with the stock up just 0.4% month-to-date. At last check, AAPL was flirting with $528.15, but today's crop of option buyers are betting on a breakout to the upside by the end of the week.
So far today, AAPL has seen roughly 103,000 calls cross the tape, compared to fewer than 74,000 puts. Most popular is the March 530 call, with around 12,400 contracts exchanged. Volume has exceeded open interest at the strike, and a healthy portion of the calls traded on the ask side, hinting at buy-to-open action. What's more, the International Securities Exchange (ISE) confirms that a handful of the contracts consisted of newly bought bullish bets.
By purchasing the calls to open, the buyers think Apple Inc. (NASDAQ:AAPL) will muscle north of $530 by the end of the week, when front-month options expire. More specifically, the buyers will make money if AAPL is sitting atop $533.71 at expiration, which represents the strike plus the volume-weighted average price of $3.71. Should the equity remain south of the strike through Friday's close, the most the speculators will forfeit is the initial premium paid for the calls. Relatively speaking, this isn't much of a dent in the call buyers' wallets, as Schaeffer's Volatility Index (SVI) for Apple continues to hover near annual lows, suggesting short-term premiums are relatively inexpensive, from a volatility perspective. In fact, the stock's 30-day at-the-money implied volatility measure has dropped 5.3% in today's session.