Apple Inc. (AAPL) iPhone Rumors Draw Weekly Call Players

The Nikkei reported that Apple Inc. (NASDAQ:AAPL) may unveil three new iPhone iterations next year

Aug 22, 2016 at 1:44 PM
facebook twitter linkedin

Apple Inc. (NASDAQ:AAPL) is lower this afternoon, after a report in the Nikkei suggested that even with the tech titan preparing to launch three new iPhone iterations next year, lack of demand could drag on shipments for fiscal 2017. Nevertheless, while AAPL stock is down 1.1% at $108.19, call options are outpacing put options, with a number of weekly traders eyeing a quick rebound for the iPhone purveyor.

By the numbers, around 165,000 calls have traded thus far, compared to 110,000 puts -- a lower-than-average session for AAPL options traders. The weekly 8/26 series is in high demand, though, accounting for seven of AAPL's 10 most active options.

Specifically, the weekly 8/26 109-strike call has garnered the most attention, with more than 20,000 contracts on the tape at last check. Drilling down, it looks like a healthy portion of the activity is of the buy-to-open kind, meaning traders are betting on AAPL to settle north of $109 at Friday's close -- when the weekly options expire.

Widening the sentiment scope reveals options traders have shown a preference for calls over puts in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 872,235 calls on AAPL, compared to 511,933 puts, over the last month.

Even more telling is AAPL's Schaeffer's put/call open interest ratio (SOIR) of 0.53, which ranks lower than all comparable readings taken in the past year. In other words, options traders are more call-heavy now toward contracts set to expire in three months or less than they've been at any point over the last 12 months.

While options traders have been increasing their bullish exposure, short sellers have been upping the bearish ante. Specifically, short interest on AAPL climbed 14.5% in the most recent reporting period. However, these bearish bets still only account for less than 1% of AAPL's available float. Going forward, the stock could encounter additional headwinds, should short sellers continue to climb on board.

In fact, despite the stock's recent comeback from its mid-May annual low at $89.47, the equity has more recently run headlong into resistance at its overhead 320-day moving average. What's more, this trendline coincides with a hefty amount of call open interest at the aforementioned weekly 8/26 109 strike, as well as the 110 strike in the same series. To the dismay of Warren Buffett, this could reinforce technical resistance for Apple Inc. (NASDAQ:AAPL), as the hedges related to these bets unwind over the next several sessions.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!