Most Active Weekly Options: Apple Inc. and Twitter Inc

Weekly options traders have set their sights on Apple Inc. (AAPL) and Twitter Inc (TWTR)

Jan 23, 2017 at 11:20 AM
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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. Stocks 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 names of notable interest are tech titan Apple Inc. (NASDAQ:AAPL) and social media stock Twitter Inc (NYSE:TWTR). Here's a quick look at how options traders are lining up on AAPL and TWTR.

Most Active Weekly Options January 23

AAPL is 0.1% lower today at $119.90 -- after earlier popping to a fresh annual high of $120.81 -- in the wake of Friday's $1 billion lawsuit against QUALCOMM, Inc. (NASDAQ:QCOM), which the troubled chipmaker called "baseless." Separately, Taiwan-based Foxconn reported it is considering a joint venture with Apple to build a manufacturing plant in the U.S., which could create up to 50,000 jobs. In any case, AAPL stock is up more than 20% over the past 12 months. But with a 14-day Relative Strength Index (RSI) of 70 at Friday's close, the equity is also overbought, perhaps explaining today's headwinds. That hasn't stopped options traders from betting on more gains, however.

Over the past 10 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have purchased 2.17 AAPL calls for every put -- a call/put volume ratio in the bullishly skewed 94th annual percentile. The February 130 call saw the largest increase in open interest during the two-week period, followed by the weekly 1/27 120-strike call, where a large number of positions were bought to open, per data from the major exchanges. The latter is also the most active AAPL call option this morning, with nearly 15,000 contracts on the tape already. And the weekly 1/27 series is dominating today's action, accounting for eight of AAPL's 10 most popular strikes.

It's an attractive time to pick up premium on AAPL options, even with the company's quarterly earnings report just over a week away. With a Schaeffer's Volatility Index (SVI) of 21% -- in the low 16th percentile of its 12-month range -- AAPL's near-term options are attractively priced, from a volatility perspective. Plus, the stock's Schaeffer's Volatility Scorecard (SVS) of 95 indicates the options market has notably underpriced Apple Inc.'s (NASDAQ:AAPL) ability to make outsized moves over the past year.

Shifting gears, TWTR is off 0.3% at $16.53, following news it will partner with Dick Clark Productions to offer exclusive live streaming of upcoming award shows. The stock is seated just below its year-over-year breakeven level, after being recently rejected at its 200-day moving average. As such, it's not surprising that almost 90% of tracking analysts call the stock a "hold" or worse.

Calls remain popular among options traders, however, with nearly five of these bullish bets bought to open for each put over the past two weeks at the ISE, CBOE, and PHLX. Moreover, the resulting call/put volume ratio of 4.77 ranks higher than 87% of the past year's readings.

Notably, the biggest rise in open interest over the period occurred at the January 2019 37-strike call, with nearly 15,000 contracts added. The major exchanges confirm positions were purchased at this strike, meaning buyers of the call are betting on TWTR more than doubling in value over the next two years. Among near-term options, meanwhile, the weekly 1/27 series attracted attention, with the 18.50- and 19.50-strike calls seeing significant open interest added.

Today, TWTR calls are trading at about 1.5 times the expected intraday pace. The weekly 1/27 17-strike call is leading the action, with a mix of buy- and sell-to-open action spotted. Like AAPL, Twitter Inc (NYSE:TWTR) is offering a bargain on short-term options at the moment, with an SVI of 52% -- lower than 87% of all comparable readings from the past 12 months.

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