Market Insider

Apple Options Top Most Actives List

Options on shares of Apple top the actives list Tuesday, as traders appear to be positioning for a big price move around its earnings report.

Apple Store
Flickr: hairygrumpy

Call/put ratio of 1.53 indicates that sentiment is skewed to the upside with more calls trading than puts. Apple reports earnings after the closing bell.

Activity is also noted across expiration dates with the biggest action concentrated within a $40-$50 range of its current price, according to data provided by Interactive Brokers.

Implied volatility for at-the-money options is high, trading at over 70 percent and is up across the board from a day ago. Higher volatility translates to higher premiums—at-the-money straddles are trading at about $22 for the put/call combination.

An increase in implied volatility could indicate that traders are expecting a significant reaction in the share price following its earnings report.

Bill Lefkowitz, vFinance Investments Options Strategist is taking advantage of the high premiums by selling out of the money options. With the price of Apple stock at $420 per share, "$380 puts expiring Friday are trading at about a dollar", he says.

The 52-week range for the stock has been $297.76 to a high of $426.70. Apple shares were slightly lower in early Tuesday afternoon trading, even as other tech stocks rallied.

The company is expected to report quarterly profits of $7.38 per share on $29.6 billion in revenue.

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