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Why Apple Inc. (AAPL) Could Have Trouble Taking Out $100

Short-term options traders have loaded up on 100-strike AAPL calls

by 8/7/2014 11:15 AM
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Calls have been the options of choice on Apple Inc. (NASDAQ:AAPL) during the past week, according to data from the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE). Over the past five sessions, speculators on the ISE and CBOE have bought to open 292,849 calls on AAPL, compared to just 115,268 puts -- yielding a bullishly skewed call/put volume ratio of 2.54.

Taking a broader view, AAPL has racked up a 10-day call/put volume ratio of 2.49 on the ISE, CBOE, and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than 87% of other such readings from the past 52 weeks, suggesting options players have shown a greater preference for bullish options over bearish just 13% of the time.

Most short-term options players are eyeing the century level for AAPL, with peak front-month call open interest of 108,952 contracts residing at the August 100 strike. Data from the ISE, CBOE, and PHLX suggests most of these out-of-the-money calls were bought to open, with options traders betting on AAPL shares to rally into triple-digit territory by mid-August.

AAPL open interest for August

For the record, AAPL hasn't once traded above $100 since its early June stock split. On a split-adjusted basis, the equity's all-time high is $100.72, reached back in September 2012. So, not only is the century level a typically stiff psychological hurdle for stocks, it's also the site of a former peak for AAPL.

What's more, with the August 100 strike hosting a glut of out-of-the-money call open interest, the shares could encounter options-related resistance here in the week ahead, as the hedges related to these calls are unwound ahead of expiration. All things considered, Apple Inc. (NASDAQ:AAPL) could find it very difficult to surmount the round-number $100 level during the short term. In today's session, the stock is up 1.1% at $95.45.


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