Weekly Options Traders Blast Apple Inc. (AAPL) Amid Spotify, Tidal Buzz

Apple Inc.'s (NASDAQ:AAPL) weekly 7/1 and 7/22 options series are popular today

by Karee Venema

Published on Jul 1, 2016 at 3:00 PM

As speculation swirls that Apple Inc. (NASDAQ:AAPL) could have its eye on Jay-Z's streaming music service, Tidal, the beef between Apple and digital music firm Spotify is reportedly heating up. Specifically, Apple has accused Spotify of "resorting to rumors and half-truths" in its complaint over a recently rejected app update, according to Buzzfeed. Nevertheless, AAPL stock is 0.3% higher this afternoon at $95.92, and weekly options traders are circling.

Drilling down, eight of AAPL's 10 most active options reside in the 7/1 weekly series, which expires at tonight's close. The two outliers are the weekly 7/22 93-strike put and 95-strike call. It looks as if one speculator may be using these weekly options to initiate a short strangle, expecting minimal movement for the stock -- or betting on a big drop in implied volatility -- over the next three weeks.

However, short-term volatility expectations are extremely low at the moment. While AAPL's 30-day at-the-money implied volatility of 23.3% rests in the 31st annual percentile, its Schaeffer's Volatility Index (SVI) of 16% rests lower than all comparable readings taken in the past year. In other words, premium on AAPL's near-term options is relatively inexpensive.

Outside of the options pits, analysts have been waxing optimistic on the shares. Of the 30 brokerages covering AAPL, 25 maintain a "buy" or better rating, with just one "sell" to be found. Should the shares resume their longer-term downtrend, a round of downgrades could translate into fresh wave of selling pressure.

In fact, AAPL has surrendered almost 28% since hitting an annual high of $132.97 last July -- and is not that far off of its May 12 52-week low of $89.47. Plus, today's upside was contained by AAPL's 50-day moving average, a trendline that halted an early June rally attempt. Separately, Apple Inc. (NASDAQ:AAPL) CEO Tim Cook has been named lead independent director of the board at Nike Inc (NYSE:NKE).

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