Options Bulls Flocking to Apple Stock

Options traders are vastly favoring AAPL calls over puts ahead of earnings

Managing Editor
Jul 27, 2017 at 1:02 PM
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The 20 stocks listed in the table below have attracted the highest total 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. One name of notable interest is Dow stock Apple Inc. (NASDAQ:AAPL), which reports earnings after the close on Tuesday. Here's a quick look at how options traders have been placing bets on shares of AAPL.

MAO July 27

Apple stock is not a new entry to the list, but its technical performance lately is worthy of discussion. The shares suffered a steep drop in early June, as tech stocks pulled back from record highs. AAPL stock spent the next few weeks skirting around the $145 level, and then went on a wild nine-day winning streak, climbing back atop its 50-day moving average. The shares are now within a chip-shot of where they were trading before the tech sell-off, up more than 6.6% in the past month to trade at $153.35.

In the options pits, AAPL calls have been outpacing puts by a wider-than-usual margin. In the past 10 days, over 4.2 million contracts have been traded, of which over two-thirds, or 2.9 million, were calls. In addition, AAPL boasts a 10-day call/put volume ratio of 2.59 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 92nd percentile of its annual range. In other words, options buyers have shown a healthier-than-usual appetite for AAPL calls over puts in the past two weeks.

Digging deeper, the September 160 and 170 calls have seen the biggest increases to open interest in the past 10 days, followed by the weekly 7/28 155-strike call. The out-of-the-money September 160 call is now home to peak open interest among all options, with nearly 94,000 contracts outstanding.

Even with earnings on the horizon, now is an opportune time to buy AAPL options, from a historical volatility standpoint. The stock's Schaeffer's Volatility Scorecard (SVS) sits at a whopping 95, indicating Apple stock has tended to exceed options traders' volatility expectations during the past year. 

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