Apple Options Traders Weigh Antitrust Concerns, Bull Note

Puts have been increasing in popularity though

Managing Editor
Oct 17, 2019 at 1:13 PM
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FAANG stocks are in focus today, ranging from Netflix's blowout earnings to Amazon.com's (AMZN) Ford partnership. As far as Apple Inc. (NASDAQ:AAPL) is concerned, the Financial Times reported that European Union (EU) regulators are looking into the tech icon's Apple Pay service over antitrust issues. 

The report is helping offset a price-target hike to $224 from $207 at Barclays, who waxed optimistic on Apple TV+ and iPhone 11 2020 sales estimates. At least check, Apple stock was trading at $233.90, extending its recent consolidation below its Oct. 14 all-time high of $238.13, with the 10-day moving average acting as support underneath. 

MAO AAPL

Options traders are always keen to make a play on the FAANG name. The stock showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume during the past 10 days, with names highlighted in yellow new to the list. In the last two weeks, roughly 968,138 weekly calls have changed hands on AAPL, compared to 752,366 weekly puts.

MAO Oct 17

However, options traders have started to target puts more in recent weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AAPL's 10-day put/call volume ratio of 0.72 ranks in the 78th percentile of its annual range.  So while calls have outpaced puts on an absolute basis, the rate of put buying relative to call buying has been quicker than usual.

Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.30 ranks in the 92nd percentile of its 12-month range. In other words, short-term speculators are more put-heavy than usual toward AAPL.

Digging deeper, the weekly 11/1 220-strike put saw the largest increase in open interest during the last 10 days. Buyers of this option are targeting a quick pullback from AAPL in the next two weeks, when the options expire.

Regardless of direction, the equity's Schaeffer's Volatility Scorecard (SVS) of 92 (out of 100) shows Apple's strong tendency to make bigger-than-expected moves during the past year, relative to what the options market was pricing in.


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