Do Options Traders See Apple Making New All-Time Highs?
The heavy call volume in the February expiry would appear to say yes. But unfortunately for Apple investors, a closer look at the activity suggests otherwise.
About 67,000 of the Feb. 360 calls were sold on Thursday — that's nearly three times the open interest of all outstanding contracts — notes Dennis Davitt, First New York's Head of Equities Derivative Trading. Call selling is actually a bearish bet on a stock, in which options traders give up the right for further gains in exchange for the premium received on the sale.
The call sales come after reports in tabloids that CEO Steve Jobs is sicker than previously thought. Shares closed nearly $5 lower to $358.30 Thursday.
"The stock is pinned at $360 for the next few days," said Davitt.
With February expiration coming today, options traders see little risk that apple will go appreciably higher. "Investors are happy to roll the dice till Friday afternoon, given it will likely be a lighter day, and they'll only have to roll it for a day," said Scott Nations, NationsShares Chief Investment Officer and Options ActionContributor.
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