How Low Can Apple Inc. (AAPL) Go?

Apple Inc. (NASDAQ:AAPL) touched a new annual low earlier

May 12, 2016 at 3:04 PM
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It's a dismal day for Apple Inc. (NASDAQ:AAPL), with the shares down 2.1% at $90.60 -- the worst performer among Dow stocks -- and fresh off a new annual low of $89.47. What's more, AAPL stock is comfortably on pace to close the week south of the critical $92 level and notch a second consecutive weekly finish south of its 200-week moving average for the first time since March 2009. Nevertheless, AAPL call options are crossing at two times the average intraday pace today.

AAPL weekly chart

Diving deeper, around 583,000 calls have changed hands on AAPL, compared to 387,000 puts. The stock's most active option is the weekly 5/13 91-strike call, where 37,682 contracts have traded. In fact, this strike is one of the most active overall stock options traded so far today.

Looking closer, there appears to be a mix of buy- and sell-to-open activity happening here. For those purchasing new positions, the goal is for AAPL to bounce back above $91 by tomorrow's close, when the weekly options expire. Conversely, those selling to open the calls are betting on $91 to serve as a ceiling for AAPL stock through week's end.

More broadly speaking, put buyers have been active in in recent weeks, per the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.72 -- in the 83rd annual percentile. Plus, AAPL's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 1.21 indicates near-the-money puts outweigh calls among options in the monthly May series.

Outside of the options pits, analysts have taken the high road toward Apple Inc. (NASDAQ:AAPL), although some are beginning to change their tune. Should any of the remaining holdouts lower their opinions on AAPL stock -- 83% maintain a "buy" or better -- the shares could extend their stay in 52-week-low territory.

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