Unusual Options Activity In Apple $AAPL

| May 27, 2015 | 0 Comments

Options on Apple (AAPL)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 the largest public company in the world and one of the most popular brand names out there. The company has a market cap over $763 billion and generates over $210 billion a year in sales.  Follow the link for more info on the company.

$AAPL is up 21% so far for the year.  The current share price of $129.62 is just 3% below the 52-week high and 52% above the 52-week low.

So what does unusual options activity in $AAPL tell us?

$AAPL’s Apple Watch isn’t quite taking off like expected, but it still has plenty of potential.  Meanwhile, the company is rumored to be getting into electric cars and other major industries besides consumer retail.  Essentially, given the company’s resources, there is no telling how high this giant could fly.

Here’s the deal…

Late last week, a trader purchased 10,000 August 135 calls for $4.15.  Keep in mind, a call option makes money when the underlying stock goes up.

The trader will break even if $AAPL shares are $139.15 at August expiration.  The cost of the trade is premium paid for the options, or $4.15 million.  That’s a fair amount to spend for out-of-the-money calls expiring in less than three months.

So why do such a risky (expensive) trade? After all, the trade is still $10 away from making money.

Well, the trader obviously thinks the stock is going up.  With Apple, there really is no limit to the company’s upside.  While the share price has only climbed about 2.5% over the last month, earlier in the year, it climbed about $15 in a month-long period.  There’s certainly no reason why it can’t do it again this summer.

Here’s the chart of $AAPL:

unusual option activity, a chart of $AAPL

$AAPL has been mostly trading sideways for the last month.  The stock did break above the 50-day moving average recently, but seems to have hit resistance.  Over the last year, there are two distinct periods of large upward moves.

As you can see, it’s well within reason to believe the stock can climb another $10 before August.  Granted, $4 million is a lot to spend on that bet.  However, in terms of a straight up, long call bet, it’s hard to fault anyway for going long on $AAPL.

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

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: Unusual Options Trading Activity

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.