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Will It Be a Good Week for Apple Inc. (AAPL)?

Apple Inc. calls have been more active than usual lately

by 6/16/2014 12:25 PM
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Apple Inc. (NASDAQ:AAPL) is bucking the broad-market trend lower this afternoon, with the shares up 0.7% at $91.90. The stock is now attempting to climb back atop its 10-day moving average -- breached for the first time since May 15 on Friday -- and option traders remain optimistic.

The tech titan has seen roughly 275,000 calls cross the tape so far today, representing a 38% mark-up to the intraday norm. For comparison, fewer than 130,000 AAPL puts have changed hands thus far.

Speculators have taken a shine to short-term options, as the equity's 30-day at-the-money implied volatility (IV) is up 1.6% at 20.3%. Furthermore, the 10 most active options expire at Friday's close.

Garnering the most attention has been the June 92.86 call, where about 22,600 contracts have traded -- mostly on the ask side, suggesting they were bought. Plus, IV at the strike is 2 percentage points higher, hinting at fresh initiations.

By purchasing the calls at a volume-weighted average price (VWAP) of $0.57, the buyers stand to make money if AAPL closes the week atop $93.43 (strike plus VWAP). In fact, profit potential is theoretically unlimited north of breakeven, while the maximum risk stands at the initial premium paid for the calls, should the shares remain south of the strike through the option's lifetime.

From a broader sentiment standpoint, today's appetite for bullish bets is just more of the same for AAPL. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 2.15 stands higher than 86% of all other readings from the past year. In other words, AAPL option buyers have picked up calls over puts at a faster-than-usual clip during the past two weeks. Nevertheless, short-term traders are still more put-biased than usual right now, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.69 registers in the 72nd percentile of its annual range.

Technically speaking, Apple Inc. (NASDAQ:AAPL) has tacked on 14.7% so far in 2014, and tagged a split-adjusted annual high of $95.05 last Tuesday. As a result, analysts have been boarding the bullish bandwagon at a rapid-fire rate, while bears have been hitting the exits. Short interest declined by 87.1% during the past two reporting periods, and now accounts for less than 0.3% of AAPL's total available float.


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