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Most Active Options Update: Apple Inc. (AAPL)

Eleventh-hour Apple Inc. option traders roll the dice on a fresh 52-week peak

by 6/6/2014 12:46 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Apple Inc. (NASDAQ:AAPL).


Another day, another new high for Apple Inc. Specifically, the stock tagged the $651.26 mark earlier today -- its loftiest perch since October 2012 -- but was last seen trading near $650.65. The equity has now rallied nearly 24% since reporting earnings in late April, and not surprisingly, option players -- and analysts -- have been upping the bullish ante in recent weeks.

In fact, over the past two weeks, the equity's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) has grown to 2.07 from 1.69, and is now ranked in the 84th percentile of its annual range. In simpler terms, long calls have been initiated (relative to long puts) at a faster-than-usual clip.

In today's session, calls are trading at a 34% mark-up to the intraday average -- and are leading puts by a nearly 2-to-1 margin. Meanwhile, the stock's 30-day at-the-money implied volatility has edged higher to linger near 22.4%, highlighting the growing demand for AAPL's short-term options. With Apple scheduled for a 7-for-1 stock split at tonight's close, all 10 of the most active options expire at the end of today's session.

The most popular contract is the at-the-money weekly 6/6 650-strike call, where 31,743 contracts have changed hands thus far. A healthy portion of these have gone off on the ask side, and volume outstrips open interest, suggesting new positions are being purchased. Data from the ISE confirms that at least some of the day's activity is of the buy-to-open kind.

The volume-weighted average price (VWAP) for the calls is $1.66, meaning traders will profit if Apple Inc. (NASDAQ:AAPL) finishes the session north of $651.66 (strike plus VWAP). Gains are theoretically unlimited with each additional move north of here, while losses are capped at 100% of the premium paid, should the equity settle south of the strike price at tonight's close.

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