Red-Hot Apple Stock Sees Heavy Call Trading

Traders have targeted front-month strikes

by Karee Venema

Published on Mar 12, 2019 at 11:00 AM
Updated on Mar 12, 2019 at 2:00 PM

Boeing (BA) hasn't been the only blue chip making headlines this week, with Apple Inc. (NASDAQ:AAPL) active in the news cycle, as well. In addition to yesterday's big "buy" rating, the iPhone said it will host a special event on Monday, March 25, with rumors swirling of potential updates to its original video content and news subscription services. And with AAPL stock boasting a 4.8% week-to-date lead -- last seen up 1.6% at $181.71-- options bulls have been busy.

On Monday, for instance, roughly 386,000 calls crossed the tape, compared to 171,000 puts. The March 180 and 182.50 calls saw the largest increases in open interest overnight, with 23,603 contracts collectively added, and buy-to-open activity detected at each front-month strike. If this is the case, call buyers expect AAPL stock to extend this week's positive momentum through the close this Friday, March 15.

Calls are the options of choice in today's trading today, with around 175,000 contracts exchanged so far -- three times what's typically seen at this point. By comparison, around 70,000 puts have traded. The March 182.50 calls are active once again, as are the March 185 calls, and it looks like some traders are purchasing new positions here.

This week's activity in Apple's options pits just echoes the broader trend. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.90 ranks in the 76th annual percentile.

Meanwhile, short-term AAPL options are pricing in relatively low volatility expectations at the moment, per the stock's Schaeffer's Volatility Index (SVI) of 22%, which ranks in the 19th percentile of its 12-month range. Plus, the security's Schaeffer's Volatility Scorecard (SVS) of 98 (out of a possible 100) indicates Apple has tended to make outsized moves over the past year, compared to what the options market had priced in.

Looking closer at the charts, the FAANG stock has been climbing higher since skimming a 21-month low of $142 on Jan. 2. The shares have only logged two negative weekly finishes so far in 2019, and are currently pacing for their highest daily close since Dec. 3. Just overhead looms the $184-$186 region, though, home to Apple's 120-day moving average and pre-bear gap levels from mid-November.

apple stock daily chart march 12

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