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Last-Minute Traders Target Apple Inc. (AAPL) Ahead of Expiration

Speculative players are initiating new December call positions on AAPL

by 12/19/2012 1:18 PM
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With front-month expiration just a few days away, it looks like traders today are opening up new December-dated calls on Apple Inc. (NASDAQ:AAPL - 530.32). So far, volume is outpacing open interest at the stock's December 530, 535, and 540 call strikes, which indicates new positions are being opened on AAPL.

Activity at the equity's at-the-money December 530 call and out-of-the-money December 540 call has been pretty evenly split between the bid and ask prices, making it difficult to determine whether traders are buying or selling at these strikes. Meanwhile, intraday data from the International Securities Exchange (ISE) suggests a healthy chunk of calls at the December 535 strike have been sold to open, in an apparent bet the tech stock will remain at or below $535 per share through the end of this week.

Taking a broader look at AAPL option trends, speculators have become relatively gloomy about the tech giant's prospects in recent weeks. During the past 10 days, the stock has garnered a 10-day put/call volume ratio of 0.72 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks above 91% of other such readings taken during the previous year, pointing to a near-peak of bearishly slanted speculation on AAPL shares.

AAPL weekly price chartLikewise, short sellers have also ramped up their exposure to the stock. During the past two reporting periods, short interest on AAPL rose by a net 22.2% -- confirming that quite a few bears have taken a keen interest in the iPad parent lately.

This rising tide of negative sentiment is interesting, especially since AAPL rebounded from the key $500 level earlier this week. This area is also home to the stock's supportive 80-week moving average, and could continue to provide a sturdy technical floor during the near term.


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