Target Call-Out Boosts Apple Inc. (AAPL) Stock, Options Volume

Target highlighted strong demand for Apple Inc. (NASDAQ:AAPL) products in its earnings call

Nov 16, 2016 at 2:20 PM
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Apple Inc. (NASDAQ:AAPL) is the top Dow performer today, up 2.4% at $109.65, after Target Corporation (NYSE:TGT) in its earnings call said demand for the tech giant's products is three times greater compared to last year heading into the holidays. On top of this, AAPL has been thrust into the M&A spotlight, with rumors suggesting the iPhone maker is considering buying LG Display Co Ltd. (ADR) (NYSE:LPL). AAPL options are trading at a blistering pace as a result, with calls and puts both trading at twice the expected pace. 

The most popular AAPL options today are the December 115 call and put, with more than 150,000 contracts of each traded so far. Most of this action is due to two huge trades that crossed almost simultaneously, though it's hard to tell how exactly the traders are positioning themselves here. Further down the list, it seems traders are selling to open the weekly 11/25 110-strike call, betting on Apple to hold below $110 by next Friday's close, when the options expire. 

Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows call buying has historically been the strategy of choice among AAPL traders. The stock's 50-day call/put volume ratio across these exchanges is 1.95, sitting just 9 percentage points from a 12-month high.

Digging deeper into the past 10 days' worth of option data, the most popular option, judging by open interest added, has been the December 110 call. Buy-to-open activity has been confirmed here by the major options exchanges, so traders are betting on AAPL topping the $110 over the next month. Luckily for any trader taking a similar route, they're paying relatively low premiums at the moment. 

Today's gains aside, Apple Inc. (NASDAQ:AAPL) has been struggling with the broader tech sector since the election. In fact, AAPL has been trending lower since its October peak above $118. On the bright side, the stock seems to have found a foothold atop its 320-day moving average, and is now entering a favorable time of the year

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