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Apple Inc. (NASDAQ:AAPL) made headlines yesterday with the news that it had hired Burberry CEO Angela Ahrendts as senior vice president of its retail and online stores. In the options pits, however, it was a fairly typical session, with total volume coming in slightly under its expected total. As the stock struggled to overtake the round-number $500 level -- which it did for a time, before closing just below it -- option traders could be found betting on additional upside.
Specifically, one of the most actively traded strikes was the out-of-the money October 505 call, where nearly 26,800 contracts were exchanged -- mostly at the ask price, suggesting they were purchased. Open interest also gained 1,785 contracts overnight, confirming the initiation of new bullish bets. Data from the International Securities Exchange (ISE) corroborates some buy-to-open activity, as well.
The volume-weighted average price (VWAP) for the AAPL calls was $2.44. Consequently, in order for the speculators to profit, they need the shares not simply to move atop the half-millennium mark -- which they've done this morning, to $501.30 -- but more specifically, to topple the breakeven point of $507.44 (strike price plus VWAP) by October expiration. A move north of this level hasn't occurred in over a month. Whether or not the Apple shares can muster such an advance ahead of this Friday's close, Tuesday's traders can rest easy knowing the most they have on the line is the initial premium paid.
In an unrelated note, the iPad parent is scheduled to report fiscal fourth-quarter earnings after the market closes on Monday, Oct. 28. Analysts are calling for a per-share profit of $7.88. Before that happens, though, Apple Inc. (NASDAQ:AAPL) is expected to unveil new versions of the iPad at an Oct. 22 event in San Francisco.
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