Traders bet big that Apple is set to rise 36 percent

Apple bulls appear to be taking to the options market to place long-term bets on the stock.

Over the past few days, there has been a considerable increase in positions in the Apple 130-strike call option expiring in in January 2018. About 10,000 of these contracts have been purchased in the past few sessions, representing positions on some $100 million worth of Apple shares.

While it is impossible to know the full extent of a given investor's positions on a stock, those buying these options will see profits on their position if Apple shares rise above roughly $133 by early 2018, which would represent a 36 percent rally for the tech giant .

"Up 40 percent in 18 months sounds shocking — until you realize that Apple was trading at that level a year ago. So it's definitely within striking distance to get to that point," Dennis Davitt of Harvest Volatility Management said Tuesday on CNBC's "Trading Nation."

More generally, "I think what you're seeing right now is people who are underweight and unsure buying calls to get exposure" to Apple. After all, the calls are trading at roughly $3, which potentially makes them a much more efficient way to gain exposure to the stock.

For that reason, said Max Wolff of Manhattan Venture Partners, "if you want to keep some of your powder dry but have some exposure to the fact that the company should be able to rally back to where it was, this is one way to do it."

In addition, Wolff said that while he doesn't anticipate a "rocket ship" back to $130, a surprise announcement of increased dividends or buybacks "could get you at least half the way back there in one day."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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