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Apple Inc. (AAPL) Split Sparks Options Fever

Apple Inc. option volume is elevated in the stock's first post-split session

by 6/9/2014 2:08 PM
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Apple Inc. (NASDAQ:AAPL) shareholders woke up to seven times as many shares in their accounts this morning, following the company's first stock split since February 2005. The Street is reacting favorably, sending the stock to a split-adjusted new annual high of $93.82. Meanwhile, options traders have descended upon the scene with plenty of enthusiasm.

Apple Inc. is the most active equity in today's options pits, with call volume running at triple the average pace, while put volume is double what is typically seen. Specifically, more than 691,000 calls have changed hands, versus 294,000 puts. The relative affordability of near-the-money options at newly adjusted strikes is likely playing a part in this. For example, the July 650 call was asked at $14.10 at Friday's close. The comparable 92.86 call is asked at $2.50 today.

The primary focus of today's Apple speculators is short-term options. Nine of the 10 most active strikes expire either at the end of this week, or next Friday, June 20. Fighting for the top slot are the weekly 6/13 92.86-strike call, which appears to be seeing some buy-to-open activity, and the weekly 6/13 94.29-strike call, which is also seeing opening activity, some of which may be on the sell side.

Panning back, calls have been the options of choice among speculators of late. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than two calls have been purchased to open for every put. The resulting call/put volume ratio of 2.04 is higher than 82% of similar readings taken during the last year. In other words, long calls (relative to long puts) are seeing a surge in popularity. This shouldn't come as a surprise, considering Apple Inc. (NASDAQ:AAPL) has jumped nearly 25% from its pre-earnings close on April 23 through its present perch at $93.58.


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