Apple Streaming Event Sparks Heavy Options Trading

Calls and puts are crossing at an accelerated clip

Mar 25, 2019 at 11:34 AM
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Options volume is accelerated on Apple Inc. (NASDAQ:AAPL) this morning, ahead of the today's highly anticipated event, where the tech titan is expected to unveil details for its new video and news streaming services. At last check, around 219,000 calls and 153,000 puts have changed hands on AAPL stock -- nearly double what's typically seen at this point, and volume pacing in the 91st annual percentile.

Short-term volatility expectations are running slightly hotter than usual, per AAPL's 30-day at-the-money implied volatility of 26%, which registers in the 59th annual percentile. Meanwhile, the equity's 30-day implied volatility skew of 5.4% is docked in the 6th percentile of its 12-month range, meaning put and call option premiums are near parity.

Drilling down, the weekly 3/29 series is hot. The weekly 3/29 185-strike put is most active so far, with 23,192 contracts exchanged -- a number of which have gone off at the bid price, according to Trade-Alert. If this is the case, put writers expect AAPL stock to hold above $185 through expiration at this Friday's close.

Elsewhere, data suggests speculators may be buying to open the weekly 3/29 192.50-strike call for a volume-weighted average price of $2.27. In this scenario, breakeven for the call buyers is $194.77 (strike plus premium paid) -- a level not toppled on a weekly closing basis since Nov. 9.

Today's generally bullish bias echoes the withstanding trend seen in AAPL's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 2.30 ranks in the 98th annual percentile, indicating calls have been bought to open at a quicker-than-usual clip.

Analysts have been raising their outlooks on the FAANG stock, too, with a bevy of bull notes helping fuel AAPL's rise to a five-month high on Friday. Earlier today, BofA-Merrill Lynch maintained its "buy" rating on the tech name, saying, "investors are underestimating the hardware revenue trajectory ex-iPhone, including a tailwind from the Apple Watch."

Today, the equity is consolidating some of its recent gains, though, down 0.6% at $189.96 to trade back below its 200-day moving average after back-to-back closes north of here late last week. However, considering the security's 14-day Relative Strength Index (RSI) closed last week at 70, a short-term pullback may have been in the cards.

apple stock daily chart march 25

 

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