Early Options Trading on Apple, Tesla, and Amazon

Options traders are targeting Apple, Tesla, and Amazon this morning

May 9, 2017 at 11:31 AM
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Looking at early options trading data, unusual activity has been spotted on three of the hottest stocks on Wall Street: iPhone maker Apple Inc. (NASDAQ:AAPL), Elon Musk's Tesla Inc (NASDAQ:TSLA), and online retailer Amazon. Below we'll take a closer look at how options traders are positioning themselves on AAPL stock, TSLA stock, and AMZN stock.  

Options Traders Stay Bullish as Apple Stock Hits Another High

AAPL shares continue to rally, up another 1% today at $154.55, earlier touching a record high of $154.88 -- its third straight all-time peak. Options volume is on pace to finish in the 98th annual percentile of its annual range, with AAPL calls trading at three times the expected intraday rate. In fact, calls account for eight of the 10 most popular AAPL options today, and the current put/call volume ratio is pacing for an annual low, at 0.34. The weekly 5/12 155-strike call is leading the pack, with more than 46,500 contracts exchanged -- about twice the second most-active option (the May 155 call). Data suggests buy-to-open activity is taking place here, meaning traders are betting on Apple stock extending its run into record-high territory before the options expire this Friday. 

This is more of the same from AAPL options traders. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has accumulated a call/put volume ratio of 2.51, which is only 2 percentage points from a 52-week bullish peak. Now is a great time to be a short-term AAPL options buyer, as the stock's Schaeffer's Volatility Scorecard (SVS) sits at 100, indicating the shares have exceeded options traders' volatility expectations in the past year.

Tesla Call Options Heat Up

TSLA shares are also on the rise, last seen 4.1% higher at $319.74, after Social Capital CEO Chamath Palihapitiya told CNBC Tesla is a "dangerous stock to be short." Options traders are certainly bullish today, with TSLA calls trading at twice the expected intraday rate. The weekly 5/12 series is especially popular, and at the top of the list is the 320-strike call. It appears traders are opening long positions here, expecting TSLA stock to continue to rise through the end of the week. 

Interestingly, this is actually a change of pace for TSLA options traders. The stock's 10-day put/call volume ratio at the ISE, CBOE, and PHLX comes in at 1.03, topping 77% of all readings from the past year. An exodus of option bears could bode well for TSLA, which has already added more than 50% in the past year.

AMZN Stock Notches Record High After Echo Show Reveal

Amazon earlier today unveiled its Echo Show device, an updated version of its popular Echo product that features a touchscreen. The e-commerce stock is up 0.8% today at $956.26 in response, earlier hitting its highest point on record, at $957.89. In the options pits, calls are trading at 1.5 times the average intraday pace. There's heavy demand for the weekly 5/12 series, though the 935-strike put is the most popular -- however, some of the activity here could be of the sell-to-open variety, meaning traders are betting on a short-term floor for Amazon stock. Further down the list, some "vanilla" bulls seem to be buying the weekly 5/12 960-strike call, betting on higher highs for AMZN before the week's end.

Data from the major options exchanges reveals fairly balanced demand for put and call buying in recent weeks. For short-term contracts, though, puts have the edge. This observation is based on AMZN's Schaeffer's put/call open interest ratio (SOIR) of 1.10, showing put open interest outweighing call open interest among contracts expiring within three months. 

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