Technical Data Shows Big Change in This Hedge Fund Favorite

AAPL put buyers are growing bolder in recent weeks

Managing Editor
Sep 2, 2022 at 8:00 AM
facebook X logo linkedin


Subscribers to Chart of the Week received this commentary on Sunday, August 28.

With all eyes on the Jackson Hole symposium this week, interest was sparked on our trading team when Bloomberg reported an increase in bets for hedge fund managers in tech. Specifically, funds for U.S. megacap tech shows Amazon.com Inc (NASDAQ:AMZN) carries the most popular long position. But funds also took bets and boosted the likes of Apple Inc (NASDAQ:AAPL) and others.

However, this lack of diversification in their portfolios poses issues. Per Senior Market Analyst Chris Prybal, when these funds buy the same names they are suffering from concentration risk. Similar to Meta Platforms Inc (NASDAQ:META), the stock sold off and subsequently saw funds pile on, making it difficult to get out of the position during mass exits.

Also of interest is AAPL’s 50-day buy-to-open put/call volume ratio, which has flipped from the most bullish of all-time (late last year the reading dropped below 0.3, or 7+ calls per every 10 options traded), to above 1.0 for the first time ever. This indicates puts have been bought-to-open over calls in the past 50 days.

CBOEpcchartcotw

Even short-term traders are preferring puts, with the security's Schaeffer's put/call open interest ratio (SOIR) of 1.24 standing in the elevated 89th percentile of annual readings. Digging a little deeper, in the past 10 days, the August 175 call and 170 put from the same series have been the most popular, with more than 1.1 million contracts purchased, combined, per TradeAlert.

These options are looking affordable, which could indicate a part of the equity’s lofty put/call ratio. The stock’s Schaeffer's Volatility Index (SVI) of 25% stands in the relatively low 18th percentile of readings from the last 12 months, implying options traders are pricing in lower-than-usual volatility expectations. What's more, AAPL’s Schaeffer's Volatility Scorecard (SVS) tally of 93 out of 100 suggests the equity tends to outperform said volatility expectations.

On a strictly technical level, Apple stock has given a mediocre performance (at best) in 2022. Off 7% in this time frame, Friday is eyeing the security’s first close below the 20-day moving average since the shares broke above the trendline’s resistance back in early July. And while the tech powerhouse remains 11% higher year-over-year, it’s lost almost 4% in the last week alone, leaving hedge fund managers and options traders alike on a road of caution for the coming weeks and months.

dailyaaplsincemay

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI