Apple in Spotlight After Reported iPhone, AirPod Production Cuts

Options traders, meanwhile, have ramped up their activity

Digital Content Manager
Mar 28, 2022 at 1:53 PM
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The shares of Apple Inc (NASDAQ:AAPL) are trading slightly lower this afternoon, last seen down 0.8% at $173.35. Weighing on the stock are reports that the tech giant slashed production on its new iPhone SE in China, which some are saying might be an early sign of the longer-term consequences of inflation, as well as the conflict in Ukraine. Apple also reduced orders for its AirPods by roughly 10 million units, while J.P. Morgan Securities said Covid-19 lockdowns in China could negatively affect iPhone sales in the region. 
 
While the news hasn't prompted any unusual options volume, with the 434,000 calls and 281,000 puts running slightly below the intraday average, the stock has once again made its way onto Schaeffer's Senior Quantitative Analyst Rocky White's list of names that have attracted the most weekly options volume in the last two weeks. In fact, it was the number-one name on the list, with 9.1 million calls and 5.8 million puts exchanged during this period. The March 172.50 and 175 calls were by far the most popular during this time period. 

mao march 28

This implies these traders were speculating on some upside for AAPL ahead of the contract's expiration last Friday. The security did wind up staging an impressive bounce off its 200-day moving average, which has helped capture pullbacks for the better part of two years. However, the shares seem to have lost steam near a familiar ceiling at the $176 level. AAPL is still trading just below its year-to-date breakeven, though it sports a 12-month lead of 43%. 

aapl march 28

With all this said, now might be the perfect time to join in on the options trading frenzy surrounding Apple stock, as these contracts can be had for a bargain right now. Options traders are pricing in relatively low volatility expectations, seen by the stock's Schaeffer's Volatility Index (SVI) of 23%, which sits in the 22nd percentile of its annual range. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) of 98 (out of a possible 100) indicates the stock's tendency to outperform said volatility expectations during the past year. 

 

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