Most Active Options: Apple, Sarepta Therapeutics

Apple Inc. (NASDAQ:AAPL) call options are heating up ahead of the September event, while Sarepta Therapeutics Inc (NASDAQ:SRPT) puts are hot ahead of an FDA decision

Aug 26, 2016 at 2:26 PM
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The 20 stocks listed in the table below have attracted the highest weekly options volume during the past 10 trading days. Names 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 stocks of notable interest are tech giant Apple Inc. (NASDAQ:AAPL) and biotech stock Sarepta Therapeutics Inc (NASDAQ:SRPT).

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AAPL is down 0.7% at $106.85, as shareholders show concern about an unprecedented, high-profile iPhone hack, which prompted the Silicon Valley titan to issue an urgent spyware update. From a longer-term perspective, AAPL is struggling to stay north of breakeven year-to-date, and is backing down from a trendline connecting its lower highs since its May 2015 peak.

Still, options buyers have grown increasingly bullish during the past two weeks, especially with speculation about Apple's next-gen products swirling ahead of the company's highly anticipated September event. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.85 is higher than 82% of all other readings from the past year, hinting at a healthier-than-usual appetite for bullish options bets of late.

Echoing that, AAPL sports a Schaeffer's put/call open interest ratio (SOIR) of 0.54, indicating that near-term calls nearly double puts. This ratio is lower than 99% of the past 12 months' worth of readings, suggesting short-term options players have rarely been more call-skewed.

Analysts also remain devoted to Apple Inc. (NASDAQ:AAPL), despite the stock's less-than-impressive performance on the charts over the past year. In fact, 26 of 30 brokerage firms maintain "buy" or better endorsements. Should AAPL extend its series of lower highs, or should the company disappoint at next month's event, a mass exodus of option bulls or a round of downgrades could exacerbate selling pressure on the blue chip.

SRPT is up 2.7% at $26.45, bringing its quarter-to-date gain to a healthy 38.7%. The stock has more than tripled since hitting a three-year low of $8 in late April, and is within  striking distance of closing its January bear gap

Still, SRPT put options are in demand, perhaps as traders brace for a possibly unfavorable Food and Drug Administration (FDA) ruling, with the agency set to finally weigh in on Sarepta's Duchenne muscular dystrophy treatment any day now, after delaying the decision for months. SRPT's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.30 is higher than 84% of all other readings from the past year, and its SOIR of 1.15 is in the 90th percentile of its annual range. In fact, total SRPT put open interest has been higher just 7% of the time during the last 52 weeks.

The majority of the most-added puts during the past two weeks are fairly deep out of the money, though. Excluding now-expired August options, the biggest open interest increases were spotted at the weekly 8/26 10- and 15-strike puts -- which expire at today's close -- as well as the weekly 9/2 12-strike put, which wouldn't move into the money unless SRPT dropped more than 50% by next Friday's close, when the options expire.

Of course, it's possible that some of the recent out-of-the-money put buying could be attributable to SRPT shareholders looking for "options insurance" ahead of the FDA decision. However, unless they bought their Sarepta Therapeutics Inc (NASDAQ:SRPT) shares near or below 2016 lows, the aforementioned weekly 9/2 12-strike puts wouldn't afford them much protection.


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