Apple Inc. (AAPL) Speculators Hope for Earnings Boost

An out-of-the-money Apple Inc. (AAPL) weekly call is in high demand

Digital Content Group
Jan 27, 2015 at 11:25 AM
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Activity has picked up in Apple Inc.'s (NASDAQ:AAPL) options pits ahead of this evening's earnings report. Specifically, the stock's 30-day at-the-money implied volatility has skyrocketed 16.3% to 43.3% -- an annual peak -- signaling increased demand for short-term contracts.

On closer look, speculators are targeting AAPL calls, which make up nine of the security's 10 most active contracts today. One of the most popular options is the weekly 1/30 115-strike call, which is seeing some buy-to-open activity. Traders taking this route expect AAPL to get a post-earnings lift above $115 -- territory not charted since early December -- by this Friday's close, when the contracts expire.

These traders could be in luck, if history repeats itself. The last three times AAPL has reported, it's gained an average of 4.5% in the subsequent session.

Today's preference for short-term calls is nothing new from the equity's option traders. AAPL's Schaeffer's put/call open interest ratio (SOIR) of 0.53 is lower than 94% of all other readings from the past year, implying near-term speculators are far more call-heavy than normal.

Though it boasts a year-over-year gain of 52.6%, Apple Inc. (NASDAQ:AAPL) has been a laggard on the charts recently. Since hitting an annual high of $119.75 on Nov. 25, the stock has dropped nearly 8%. At last check, AAPL was off 2.4% at $110.40.

Daily Chart of AAPL Since Nov. 19, 2014 with $115 Level
 

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