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Most Active Options Update: Apple Inc. (AAPL)

Option traders are betting on Apple Inc. to hold above $90 through week's end

by 6/25/2014 1:16 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).


Apple Inc. is sitting slightly higher this afternoon, in the wake of an early morning price-target hike at Credit Suisse, and news that the company will open its first-ever brick-and-mortar store in Eastern Europe. In the stock's options pits, overall volume is running at a 13% mark-up to the average intraday pace. Short-term options are in focus, per the equity's 30-day at-the-money implied volatility (IV), which is up 8.5% to 26.5% -- its loftiest perch since mid-April. Diving deeper reveals a number of speculators are using both calls and puts to bet on the stock maintaining its perch atop the $90 mark through week's end.

The most active AAPL option today is the weekly 6/27 90-strike call, where 35,098 contracts have changed hands. A healthy portion of these have crossed on the ask side and volume outstrips open interest -- two indications new positions are being purchased. Data from the International Securities Exchange (ISE) confirms that at least a portion of the day's activity is of the buy-to-open kind.

With AAPL last seen at $90.38, these calls are currently in the money (albeit by a slim margin). However, in order for the call buyers to profit, the stock must be sitting north of breakeven at $90.61 (strike plus the volume-weighted average price of $0.61) at Friday's close, when the weekly options expire. Gains will accumulate with each notch above here AAPL travels, while losses are capped at 100% of the premium paid, should the stock settle south of the strike at expiration. Of note, AAPL tagged an intraday high of $90.70 earlier.

Meanwhile, on the put side, AAPL's weekly 6/27 90 strike has seen notable activity. However, a significant portion of these contracts have traded on the bid side, pointing to seller-driven activity. Plus, volume exceeds current levels of open interest, hinting at the initiation of new positions.

By selling to open the puts, traders are hoping Apple Inc. (NASDAQ:AAPL) keeps its footing atop $90 through the remainder of the week, allowing the puts to expire worthless, and the traders to retain the initial credit as their maximum possible reward. A move below $90, meanwhile, could put the traders on the hook to buy shares of AAPL at the strike price, representing a premium to where they're trading on the Street.


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