The Key Level Apple Inc. (AAPL) Traders Are Watching

Option traders are watching the century level on Apple Inc. (AAPL) ahead of next Monday's March media event

by Kirra Fedyszyn

Published on Mar 18, 2016 at 2:02 PM
Updated on Jun 24, 2020 at 10:16 AM

Apple Inc. (NASDAQ:AAPL) is sure to make headlines next week, as the company host its highly anticipated March media event Monday, where its four-inch iPhone and new iPad are expected to make their debut. Then, on Tuesday, AAPL will appear in a federal court for a cross examination with the FBI in the iPhone encryption case. Ahead of these events, option traders have been ramping up their exposure to a key AAPL technical level.

In fact, the top two open interest positions for AAPL currently belong to the soon-to-be front-month April 100 put and call, respectively. Specifically, 219,441 contracts currently reside at the April 100 put, while 198,204 contracts are found at the April 100 call. What's interesting is that open interest rose by roughly 70,000 contracts at each strike on Feb. 19, suggesting both options may have been used to initiate a larger straddle.

Digging a little deeper, both the April 100 put and call have seen their fair share of "vanilla" buy-to-open activity, according to data from the International Securities Exchange (ISE). For those purchasing new puts, the goal is for AAPL to settle south of the century mark at the close on Friday, April 15 -- when the options expire. Conversely, call buyers are betting on the stock rallying north of this mark over the next four weeks.

Overall, though, option traders -- unlike short sellers -- are skeptical of AAPL. At the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.67 sits higher than 90% of all readings from the past 12 months.

Regardless of whether traders are buying puts or calls, it's not a bad time to pick up short-term AAPL options, either. The equity's Schaeffer's Volatility Index (SVI) of 22% sits in just the 13th percentile of its annual range. That means near-term options are pricing in relatively low volatility expectations at the moment.

Technically, the stock has spent time on both sides of the century mark in 2016, last seen down 0.1% at $105.66. Longer term, Apple Inc. (NASDAQ:AAPL) is down 17.1% year-over-year.

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