Unusual Options Activity: Apple (AAPL)

Shares of consumer tech giant Apple (AAPL) have held up better than most tech stocks in the past year. However, one trader sees shares continuing their recent downtrend in the coming weeks.

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  • That’s based on the October $133 puts. With 28 days until expiration, 2,410 contracts traded compared to a prior open interest of 104, for a 23-fold rise in volume on the trade. The buyer of the puts paid $0.90 to get into the trade.

    Shares recently traded for about $154, so the stock would need to drop nearly 15 percent in about a month for the option to close in-the-money. That would put the stock near its 52-week low of $129.

    So far, earnings are down about 10 percent over the past year, and revenues have stayed about the same at Apple.

    Action to take: Shares are likely a long-term buy under the $130 range, given the company’s long-term prospects and strong brand. However, it’s likely that markets will trend down in the coming weeks, so potential buyers need to be patient here.

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  • For traders, the October puts are a bit aggressive, but can likely deliver mid-to-high double-digit returns given their low cost. They’re unlikely to move in-the-money in the time they have left, but nimble traders can likely get in and out with a decent short-term profit on the downside.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.