Unusual Options Activity In Apple $AAPL

| August 14, 2015 | 0 Comments

Unusual Options Activity In Apple $AAPL

As many of you know, unusual options activity can be a valuable indicator as to what traders are thinking, and more importantly, where these stocks are heading in the short-term.

This is something professional options traders pay a lot of attention to, and for good reason…  Unusual options activity can “tip off” big moves in a stock, either up or down.

So let’s take a look at some ‘interesting’ activity that caught our eye this week…

Apple $AAPL is of course the world’s largest company – even after its recent selloff.  The company’s immensely popular products set the standards in both the retail and technology sectors.  For a good description of the company, follow the link.

As of this writing, $AAPL is trading at $115.26 at market close… down 6% in the last week but still up over 5% for the year.  That’s 14% below the 52-week high and 25% from the 52-week low.

So what does unusual options activity in AAPL tell us?

AAPL hasn’t been the consistent climber we’re used to seeing over the last few years.  The stock did make a big move higher earlier in the year.  However, it’s been mostly sideways action for the last six months… until this month’s earnings.

For the first time in several quarters, AAPL’s earnings disappointed investors.  Growth just wasn’t what investors have come to expect.  And, there really was very little detail regarding Apple Watch sales.  Investors were hoping to get more data about the company’s newest product.

Here’s the deal…

Last week, a trader sold a large block of puts on AAPL.  Keep in mind, a put option makes money when the underlying stock goes down, so selling a put option benefits from a move in the opposite direction.

More specifically, a trader sold about 9,000 September 110 puts for $2.81.  The total cash collected for this trade is roughly $2.5 million.  Breakeven point for the trade is $107.19.

A trade like this could be two things.  It could be a bullish or neutral bet suggesting the stock won’t fall below $110.  Or, it could be the closing of a long put trade for a profit.  Either way, the trade implies the stock is done with its recent selloff.

Here’s the chart of $AAPL:

unusual option activity, a chart of $AAPL

As you can see, AAPL was mostly trading sideways until earnings last month.  Subsequently, the stock took a nosedive about 10 points lower.  It’s farthest the price has been below the 50-day moving average in quite some time.

The funny thing is, the earnings report for AAPL wasn’t all that bad.  It just wasn’t what investors have come to expect.  There’s no reason to believe the share price won’t bounce back once rational expectations return.  This put sale, whether it’s closing or opening, is another strong sign that the shares are at or near a bottom.

More Options Trading Ideas…

Keep in mind, there’s a lot more unusual options activity going on than what we discuss here.

We just try to bring you what we feel are the most significant ones– and the ones you might actually be able to make some money on!

Yours in Profit,

Gordon Lewis
Options Trading Research

Note:  Gordon Lewis has been trading options for more than 15 years and he now writes and edits for Optionstradingresearch.com.  You can sign up for the newsletter and get a free research report. We are your go-to source for top notch options trading research.

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Category: Options Trading

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also one of the key analysts behind the highly successful Options Trading Wire and Advanced Options Adviser. As a market maker on the floor of the CBOE, Gordon analyzed and traded stocks and options across a broad range of market caps and industries including retail, internet, oil, insurance, and telecom. He often traded thousands of options contracts per month… and it’s fair to say, Gordon’s analyzed and invested in some of the most complex and successful options strategies in the world.

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