Apple Options Traders Eerily Quiet Ahead of iPhone X Sales Launch

Options traders have been buying to open calls at a quicker-than-usual pace on Apple stock

Oct 26, 2017 at 12:49 PM
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Apple Inc. (NASDAQ:AAPL) will begin taking orders for its iPhone X tomorrow morning. Concerns over production delays cropped up recently, but Rosenblatt Securities said this morning the issue has been resolved and it believes output "could reach 3 million units by the November 3rd launch date." And while AAPL stock is trading up 0.7% at $157.55 ahead of the event, one group of options traders is betting on a steep retreat over the next several weeks.

Taking a quick step back, Apple options volume is running at a slower-than-usual pace today, with 133,651 contracts traded so far -- compared to an expected intraday amount of 178,000. The soon-to-expire weekly 10/27 series has seen the most action, though it's not entirely clear how the action is unfolding.

Further down the list is the November 142 put, where it looks like new positions are being purchased. If this is the case, the traders expect AAPL stock to sink to levels not seen since last April by front-month expiration at the close on Friday, Nov. 17 -- a time frame that includes Apple's earnings report, due out after the close next Thursday, Nov. 2.

More broadly, AAPL options traders have shown a healthier-than-usual bias toward bullish bets over bearish. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 295,379 calls in the last 10 days, compared to 138,203 puts.

However traders are placing their bets, it's getting pricey to purchase premium on short-term options, relatively speaking. In fact, Apple's 30-day at-the-money implied volatility was last seen at 24.5% -- higher than 93% of similar readings taken in the past year, meaning volatility expectations are on the rise ahead of earnings.


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