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Fire Sale on Apple Inc. (AAPL) Options

Weekly calls active as Apple Inc. options prices hit historical lows

by 3/4/2014 2:27 PM
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Bargain hunters may be headed to the Apple Inc. (NASDAQ:AAPL) option pits, as premiums are at a historical low. In today's trading, Apple's 30-day at-the-money implied volatility dropped to 18.75%, its lowest point in over a year. In a similar vein, Schaeffer's Volatility Index (SVI) for Apple Inc. has retreated from 33% in late January to its present reading of 19%. This is lower than 89% of all other SVI readings measured during the last 12 months.

In recent sessions, it appears as though Apple options players have been focused on the put side of the fence, relatively speaking. Since the end of January, the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio has shifted from 0.59 to 0.68, which ranks in the 83rd annual percentile. In other words, demand for long puts -- relative to calls -- has accelerated to above-average levels of late.

This increased put-buying activity has transpired in concert with healthy price action in the shares. Apple Inc. (NASDAQ:AAPL) had a solid February, after beginning the month with an intraday move south of the psychologically key $500 level. By Friday's close, the shares had gained 5.1% during the brief month, but remain in the hole from a year-to-date perspective, down 5.5% at $529.95. Recent put buyers may be looking to capitalize on cheap option premiums as they bet on future downside.

In today's session, eight of the top 10 most active AAPL strikes will expire at the closing bell this Friday. Taking the top slot is the weekly 3/7 530-strike call, where volume exceeds open interest and the majority of the trades have crossed at the ask price, suggesting bullish bets are being purchased to open. The weekly 3/7 530 strike is most active on the put side as well, but this looks to be a mix of buyers and sellers, per information from the ISE.

Outside of the options pits, the iPhone parent is in the news today after naming a new chief financial officer. Luca Maestri will take over in September for Peter Oppenheimer, who will begin to transition responsibilities in June. Maestri currently serves as the company's senior vice president of finance and corporate controller.


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