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Is the worst over for Apple Inc. (NASDAQ:AAPL)? The short-term speculative crowd seems to think so, as evidenced by recent trends in the options pits. At the Chicago Board Options Exchange (CBOE) over the last five days, 93,867 calls have been bought to open, versus 41,811 puts, resulting in a lopsided call/put volume ratio of 2.25.
Broadening the scope a bit, in the last 10 days, Apple option traders have bought to open 276,126 calls on the CBOE, International Securities Exchange (ISE), and NASDAQ OMX PHLX (PHLX), compared to only 141,021 puts. The resulting 10-day call/put volume ratio of 1.96 ranks higher than 95% of the past year's readings. In other words, long calls have rarely been in higher demand over the last 12 months.
It's a good time for these option bulls to jump in the ring, as far as their wallets are concerned. AAPL's Schaeffer's Volatility Index (SVI) has dropped to 19%, which stands in the 8th annual percentile and is just 3 percentage points off an annual low. Short-term Apple Inc. options, therefore, are relatively cheap. Also, Schaeffer's Volatility Scorecard (SVS) stands at 85, indicating that AAPL options are fairly priced, relative to the odds of a big move on the charts.
Speaking of the charts, AAPL shares have been trying to stage a recovery since their short-term bottom of $388.87 on June 28. In the ensuing weeks, the stock has gained roughly 17% to its present perch of $455.05. The shares are following the broader market lower today, however, and are poised to close south of their 10-day moving average for only the fourth time since June 28. Meanwhile, long-term Apple watchers will remember that the shares are still trading at a 35% discount to their September 2012 peak at $705.07.
Even in the wake of Apple Inc.'s (NASDAQ:AAPL) rocky 2013, however, the analyst community continues to support Tim Cook and company. Of the 36 analysts that follow the shares, 28 have named the stock a "buy" or better, leaving eight "hold" ratings and not one "sell." The downside for the bulls here is that there is little wiggle room for further votes of confidence, even if the shares continue to muscle higher.