Most Active Options: Apple Inc. and Twitter Inc

Apple Inc. (NASDAQ:AAPL) and Twitter Inc (NYSE:TWTR) short-term options are attractively priced, from a historical volatility standpoint

by Kirra Fedyszyn

Published on Mar 24, 2016 at 12:38 PM

The 20 stocks listed in the table below have attracted the highest options volume during the past 10 trading days. Stocks highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two notable names are tech giants Apple Inc. (NASDAQ:AAPL) and Twitter Inc (NYSE:TWTR).

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It's been an interesting week for AAPL, which held a media event Monday in which the company revealed its latest line of products. On Tuesday, the company was ready to head to court with the FBI when the Justice Department requested the hearing be postponed after finding a possible solution that would allow data to be retrieved from an iPhone without AAPL's help. Today, traders are digesting Re/code reports that Apple Pay will be integrated into Safari later this year, and will be accessible to shoppers using iPhones or iPads with fingerprint technology.

However, since touching a year-to-date peak in Monday's session, AAPL has backpedaled, on pace for a weekly drop of 0.3%. The stock was last seen 0.5% lower at $105.61.

The stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 0.63, higher than two-thirds of all readings from the past year. While this ratio suggests traders are buying bearish bets at a faster-than-usual clip, calls have been the options of choice on an absolute basis, if less so than usual.

The weekly 3/24 107-strike call and April 110 call saw the most action over the past 10 sessions, excluding now-expired March-dated options. Both of these contracts saw more action on the buy-to-open side, as well, meaning near-term traders are keeping the faith that AAPL will soon resume its journey to year-to-date highs. But with the weekly option set to expire out of the money tonight, buyers of the calls may be disappointed.

TWTR shares continue to slump beneath their 40-day moving average. Today the stock is 1.4% lower at $15.79 -- on pace for a weekly drop of 5.9% -- possibly on reports that Alphabet Inc (NASDAQ:GOOGL) is building a livestreaming app called YouTube Connect that would compete with Twitter's Periscope.

TWTR's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.79 is higher than 91% of all other readings from the past year -- but that's down from an annual high just over a week ago, suggesting option buyers are backing off their bullish extreme. During the past 10 sessions, the most active front-month option has been the April 15 put , buyers of which are betting the stock will extend its retreat in the coming weeks. 

Apple Inc. (NASDAQ:AAPL) and Twitter Inc (NYSE:TWTR) are presenting attracting buying opportunities for short-term option traders. The stocks' Schaeffer's Volatility Indexes (SVI) currently rank in the 4th and 18th percentiles of their respective annual ranges, meaning the options market is pricing in relatively low volatility expectations -- making short-term options look like a bargain.

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