Short-Term Traders Eye Apple Inc. (AAPL) Ahead of Possible iPhone Event

On a busy news day, Apple Inc.'s (AAPL) weekly 9/2 series of options is seeing heavy action

by Alex Eppstein

Published on Aug 29, 2016 at 2:14 PM
Updated on Jun 24, 2020 at 10:16 AM

Earlier today, Apple Inc. (NASDAQ:AAPL) sent out an invite for an event next Wednesday, Sept. 7. Details are few and far between, but as you might have guessed, the rumor mill has already been fired up. According to various websites, the event could mark the unveiling of the next iPhone, the Apple Watch 2, or perhaps a new line of MacBook Pros. 

Separately, AAPL is being sued by iPhone 6 owners, who claim the smartphones' touchscreens are defective. Plus, the European Commission will likely recommend that the company pay back taxes of more than one billion euros.

In options land, the weekly 9/2 series accounts for seven of the 10 most active strikes. In the lead are the weekly 9/2 107-strike call and put, with buy-to-open activity detected at both options. Buyers of the at-the-money call anticipate AAPL will extend its run higher through Friday's close, when the series expires, while the put buyers foresee the stock dropping back below the strike. At last check, the shares are 0.3% higher at $107.24.

More broadly speaking, call buying has been the trend in AAPL's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly twice as many calls as puts in the last two weeks. The resultant call/put volume ratio of 1.87 sits in the bullishly skewed 84th annual percentile. Underscoring this call-skew, AAPL's Schaeffer's put/call open interest ratio (SOIR) of 0.54 indicates calls nearly double puts among options expiring in the next three months, and ranks below 99% of all other readings from the past 12 months.

Optimism toward the stock is detected elsewhere on the Street. For instance, 26 of 30 analysts rate AAPL a "buy" or better. Also, only 1% of the stock's float is sold short, despite the fact that short interest increased 17% during the last two reporting periods.

This sunny-side-up sentiment is surprising, considering how badly the blue chip has underperformed over the long term. Specifically, Apple Inc. (NASDAQ:AAPL) has gained less than 2% year-to-date, while the Dow is up more than 6%. What's more, the shares were recently rejected by their 320-day moving average. Should the shares struggle going forward, a capitulation among the bullish holdouts could exacerbate losses.

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