Apple Inc. (AAPL) Bulls Stay Hungry

Activist investor Carl Icahn says Apple Inc. (AAPL) is worth a lot more than its current price

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Published on Feb 12, 2015 at 11:18 AM
Updated on Apr 20, 2015 at 5:32 PM

Apple Inc. (NASDAQ:AAPL) has been on fire lately. Week-to-date, the shares have added roughly 7%, recently benefiting from a new deal with First Solar, Inc. (NASDAQ:FSLR). The equity is gaining once again today, up 1.8% at $127.11 -- and earlier hit a record high of $127. 48 -- after activist investor Carl Icahn said he values the company at $216 a share. Speculators are adopting that bullish attitude (on a less grandiose scale), as AAPL calls are trading at twice the normal intraday clip.

Sliding right in, short-term contracts are in high demand, as the equity's 30-day at-the-money implied volatility has popped 5.7% to 24.5%. Specifically, the weekly 2/13 126- and 127-strike calls are in the lead, and it appears buy-to-open activity is transpiring. These speculators are hoping for AAPL to extend its rally above the respective strikes by the close tomorrow, when the contracts expire. However, in light of the security's recent surge, its 14-day Relative Strength Index (RSI) stands at 70 -- in overbought territory, suggesting a breather could be in the near-term cards.

From a volatility standpoint, short-term traders are getting AAPL options at bargain price, according to the stock's Schaeffer's Volatility Index (SVI). This reading comes in at 15% -- its lowest level in the past year.

Given its technical success, it shouldn't come as a surprise that Apple Inc. (NASDAQ:AAPL) has earned bullish attention on the Street. Analysts, for example, are overwhelmingly in the stock's corner, as 80% of covering brokerage firms deem it a "buy" or better.

Daily Chart of AAPL Since January 2015

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