Skeptics Sell Premium as Android Takes a Bite of Apple's Market Share

Android has snagged some market share from the iPhone, according to new data

Managing Editor
Dec 5, 2017 at 9:32 AM
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Shares of Apple Inc (NASDAQ:AAPL) are in focus today, as traders weigh competing headlines for the tech powerhouse. AAPL won its European Union (EU) trademark case against Chinese rival Xiaomi -- but research firm Kantar reported a sharp drop in iPhone market share during the three-month period ended in October.

Specifically, the lack of availability for the iPhone X helped spark a year-over-year iOS market share decline to 32.9% in the U.S., down from 40.6% this time last year. Meanwhile, competing platform Android ramped up its domestic market share to 66.2% from 58%.

AAPL is down 0.5% at $168.98 in early trading, backing away from the round $170 level. With its year-to-date gain of 46.6% through Monday's close, the tech stock is one of the top-performing Dow components of 2017, eclipsed only by industrial giants Boeing (BA) and Caterpillar (CAT).

Options traders have shown a preference for AAPL calls over puts during the past two weeks, with speculators buying to open 337,778 calls and 170,960 puts across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

However, traders on Monday appeared to be betting on short-term headwinds for AAPL. The weekly 12/8 175-strike call was most active, with ISE data showing a skew toward sell-to-open activity. By selling these short-term, out-of-the-money calls, traders are betting on Apple stock to remain at or below $175 through the end of this week.

Now is a good time to sell premium on AAPL, too, as short-term volatility expectations are somewhat elevated. As of Monday's close, Trade-Alert pegged the stock's 30-day at-the-money implied volatility at 22.3%, in the 71st percentile of its annual range. Meanwhile, from a technical standpoint, the shares have yet to close a week north of $175 -- despite a couple of photo finishes at $174.67 and $174.97 back in November.

 

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