AAPL Surges on Earnings, Stock Split

Analysts are overwhelmingly optimistic on the tech behemoth

Deputy Editor
Jul 31, 2020 at 10:26 AM
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Apple Inc. (NASDAQ:AAPL) entered the earnings confessional today, and the results were encouraging to say the least. The company's fiscal third-quarter earnings and revenue beat Wall Street's estimates, with gains in every product category as consumers and students move to remote work and learning. It was also announced that Apple approved a four-for-one stock split. As a result, the shares of APPL are surging, last seen up 6.1% to trade at $408.16, earlier hitting a fresh record high of $412.

This news has analysts confident in Apple stock, with no less than 15 chiming in with price-target hikes already today. The most notable comes from Wedbush, with a raise to $475 from $450. Coming into today, 20 brokerages covering AAPL called it a "buy" or better. Meanwhile, four recommended a tepid "hold," and one more called it a "strong sell."

Today's surge sent Apple stock well above its previous July 13 all-time high of $399.82, and the equity is set to close above its 20-day moving average -- a long-term trendline of support that the stock fell below just last week. Even more impressive, AAPL boasts an 96% year-over-year lead. 

The options pits show a strong preference for calls. Apple stock's Schaeffer's put/call open interest ratio (SOIR) of 0.93 sits in the 24th annual percentile, implying long-term options players have rarely been more call-biased.

Today, options traders are taking a greater-than-usual interest in the Big Tech staple. Options are trading at five times average intraday amount -- with volume pacing in the top percentile of its annual range -- with new positions being opened at the weekly 7/31 410-strike call. Running in second is the weekly 7/31 400-strike call, followed by the 400-strike put from the same series.

Regardless of direction, with earnings out of the way, premium can be had for a bargain amid a volatility crush. The security's Schaeffer's Volatility Index (SVI) of 32% is in the 18th percentile of its annual range, meaning options players are pricing in relatively low volatility expectations right now. 


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