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Option Brief: Apple Inc. (NASDAQ:AAPL) ticked lower on Friday, breaching its 20-day moving average for the first time since mid-April, as traders digested reports of a series of smartwatches slated for debut this fall. Option speculators, meanwhile, focused on the stock's short-term trajectory; the equity's 30-day at-the-money implied volatility jumped 6.4% to 20.1%, reflecting a growing demand for short-term options.
Calls were the options of choice, running at a 34% mark-up to the average daily volume, and more than doubling the number of AAPL puts exchanged. The weekly 6/27 92-strike call saw the biggest open interest inflation, rising by nearly 8,500 contracts, and it looks like a healthy portion of the calls were bought to open.
By purchasing the calls at a volume-weighted average price (VWAP) of $0.80, the buyers will make money if AAPL ends the week -- which represents the calls' lifetime -- north of $92.80 (strike plus VWAP). Profit potential is theoretically unlimited above breakeven, while risk is capped at the initial premium paid, should AAPL remain south of $92 through Friday's close. In early trading, the shares of Apple Inc. (NASDAQ:AAPL) are paring some of last Friday's losses, up 0.5% at $91.38.