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Stock and options buyers flood the AAPL trading pits
Related Symbols: AAPL
Apple (NASDAQ: AAPL) rallied nearly 4% on Friday and took on a new 52-week high. All the excitement was driven by the company’s announcement that the iPad tablet-style computer will hit shelves on Saturday, April 3rd. This euphoric rally sparked a sense of deja vu in market watchers, who previously saw Apple shoot to new highs in the weeks leading up to the company’s late-January keynote announcement (when the widely-anticipated iPad officially debuted).
Following the January announcement, however, AAPL entered a downward slide, falling from a January 19th peak of 215 to its February 4th low of 192. This is a classic example of “buy the rumor, sell the news,” which is exemplified by a sharp run-up before a scheduled event, followed by a rush for the exits once the event transpires. We have no reason to suspect that the iPad’s arrival in stores will be any different. Over the next three weeks, volume (and volatility) will likely be notable in the shares as traders position themselves for how the new device’s launch will impact Apple’s bottom line. If you plan to participate in some of this volume, be sure to keep commissions and transactions costs in mind.
Speaking of volatility, the front-month, at-the-money straddle expanded in Friday’s trading, bucking the overall trend in the market as demonstrated by the CBOE Market Volatility Index (VIX) plumbing new lows. Thursday night, the 210-strike straddle was trading for $7.80; the 220-strike straddle was priced at $8.43 at Friday’s close (AAPL gained $8.24 on the day to close at $218.95). The options market is now projecting a move of nearly 4% in AAPL between now and March options expiration in less than two weeks.
On the options front, trading was heavy; in fact, more than 200,000 contracts had crossed the tape within the first 90 minutes of the trading day. The majority of traders were focused on the short-term, as the at-the-money March 220 calls saw more than 63,000 contracts trade on open interest of 33,000. The March 230 calls, meanwhile (out-of-the-money by $11), saw nearly 50,000 contracts trade versus open interest of 20,700. This morning, open interest at these strikes expanded slightly, rising by a few thousand contracts each, again exemplifying that this volume was both buyers and sellers and not all one direction.
More on AAPL:
Apple hits record high after iPad announcement
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