Put Buyers Busy as Apple Inc. (AAPL) Tests Key Trendline

Apple Inc. (AAPL) reportedly agreed to a nearly $350 settlement with the Italian tax office

Alex Eppstein
Dec 30, 2015 at 1:27 PM
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Apple Inc. (NASDAQ:AAPL) is trading lower today after the iPad parent reportedly agreed to pay Italy nearly $350 million to settle a tax dispute. At last check, the tech stock is down 0.9% at $107.75, and for the month, it's facing a nearly 9% deficit.

Looking at the charts more closely, AAPL closed below its 100-week moving average earlier this month for the first time since April 2014. Today, however, it appears to have found a foothold at this trendline.

At least one group of option traders are counting on this support to give out by Thursday's closing bell. Specifically, short-term speculators are buying to open AAPL's weekly 12/31 108-strike put for a volume-weighted average price (VWAP) of $0.78. In other words, these buyers need AAPL to breach breakeven at $107.22 (strike less VWAP) by expiration. If instead the shares muscle back atop $108, the most the traders stand to lose is the initial premium paid.

They're hardly alone in their bearish expectations for Apple Inc. (NASDAQ:AAPL). As we noted yesterday, traders have been buying to open puts over calls at an accelerated clip in recent weeks -- though short sellers have been hitting the exits en masse.

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