Short-Term Options Pop as AAPL, MSFT Stocks Climb Dow

Tech shares are seeing strength today

by Josh Selway

Published on Jun 7, 2019 at 12:20 PM
Updated on Jun 21, 2019 at 8:20 AM

Tech stocks Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) are the top Dow performers at midday, as the sector tries to recover from recent weakness. In fact, the latter has rallied to fresh record highs. In response, weekly options are seeing heavy trading.

Starting with AAPL, the weekly 6/7 series is seeing a ton of attention, with the 190- and 192.50-strike calls leading the way. Looking at the top trades, 4,000-contract blocks of the August 175- and 185-strike puts crossed simultaneously earlier, hinting at a potential spread trade. Overall option volume is running in the 95th annual percentile, and the stock was last seen trading up 3% at $190.72, putting its weekly gain at 9%.

MSFT shares are also trading up 3%, tapping a record peak of $132.25. Call volume has exceeded put volume so far, with volume already topping the daily average. However, the weekly 6/7 130-strike put is leading the way, where new positions are opening in hopes of a last-minute profit before expiration at today's close. Near-term volatility expectations were muted coming into today, based on the Schaeffer's Volatility Index (SVI) of 21%, which ranks in the low 16th annual percentile.

Another blue chip making a notable move today is Caterpillar Inc. (NYSE:CAT), trading up 1% at $124.66, putting it on pace for a fifth straight win since its year-to-date low from last week. The most popular strike in the options pits is the June 125 call, where traders may be closing positions that they already sold to open, with CAT shares earlier topping the strike.

This comes as pessimism has been picking up on the machinery giant. First of all, put buying has picked up at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), with the 10-day put/call volume ratio of 0.86 ranking in the 85th annual percentile. In the meantime, short interest jumped by 91.6% in recent reporting periods.

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