Weekly Options Traders Target Apple as Stock Hits Record High

Near-term Apple options can be had for a relative bargain with earnings out of the way

Aug 8, 2017 at 1:47 PM
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In recent weeks, we've highlight the apparent optimism of Apple Inc. (NASDAQ:AAPL) options traders, which likely led to some profitable trades, considering the iPhone maker's impressive earnings report. Looking at the numbers, AAPL has a 10-day call/put volume ratio of 2.20 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which is higher than 78% of readings from the past year -- pointing toward a unusual levels of call buying. 

Even with Apple earnings in the rear-view, call buying has remained popular. For instance, calls are trading at two times the expected pace in today's trading, with the stock's single-day put/call volume ratio sitting at just 0.40 -- 6 percentage points from a 12-month low. Overall, call volume is running in the 94th annual percentile. 

This call-skew is due in large part to heavy interest in the weekly 8/11 options series. The 157.50-, 160-, and 162.50-strike calls all appear to be seeing buy-to-open activity today. This would mean traders are betting on extended upside from AAPL stock through the end of the week, when the contracts expire.

It's not surprising to note that it's a good time to speculate on the tech giant with options, given earnings have just passed. As evidence, the equity's Schaeffer's Volatility Index (SVI) of 18% ranks in the low 21st annual percentile. In simple terms, this suggests near-term options are pricing in unusually low volatility expectations. This fact becomes even more important when you consider AAPL has a Schaeffer's Volatility Scorecard (SVS) of 98, highlighting the Dow stock's tendency to make bigger-than-expected moves on the charts over the past 12 months, compared to what the options market has priced in. 

Apple stock is leading the Dow higher today, with the shares last seen 1.3% higher at $160.80, earlier topping out an all-time peak of $161.83. This brings AAPL's year-to-date lead to 39.7%, which is second to only Boeing's among Dow components. However, Apple's 14-day Relative Strength Index (RSI) now sits at 69, knocking on the door of overbought territory. 
 

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