Apple Inc. (AAPL) Flashes Rare Bullish Options Signal

Over one million AAPL call options traded yesterday

Feb 2, 2017 at 11:50 AM
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Apple Inc. (NASDAQ:AAPL) stock jumped to an annual high of $130.49 yesterday on the heels of a blowout earnings report. The share price wasn't the only thing that popped, either -- so too did volume on AAPL call options. In fact, call volume surpassed one million contracts for the first time since early August.

Based on an analysis by Schaeffer's Quantitative Analyst Chris Prybal, similar signals have yielded bullish returns for the Dow stock, going back to 2000. The charts below break down the data in-depth:

aapl stock returns after unusual call volume feb 2

aapl stock anytime returns feb 2

As you can see, one week after AAPL call volume surpasses one million, the stock has been positive three-quarters of the time, with an average gain of 1%. This compares favorably to an anytime one-week advance of 0.6%, with 56% positive. The average return is even more impressive going out two weeks (3% vs. 1.2%), with almost 70% positive (vs. 57% anytime).

At last check, Apple stock was 0.1% lower at $128.65, even after a price-target hike to $142 from $114 at J.P. Morgan Securities. This isn't necessarily unexpected, though, considering yesterday's bull gap landed the shares in "overbought" territory by the close -- based on their 14-day Relative Strength Index (RSI) of 70.

From the looks of it, options traders are banking on even more gains for AAPL, based on its 20-day call/put volume ratio of 1.68 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Today, calls more than double puts, with what looks like buy-to-open activity at the weekly 3/3 129-strike call.

As alluded to, Apple Inc. (NASDAQ:AAPL) is more or less treading water at midday. On the other hand, shares of these two Apple suppliers have sunk on downbeat guidance.

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