Apple options earnings bets skew bullish before Thursday report
Options data show Apple traders favoring calls as the stock sits near a record and implied earnings volatility rises.
By Theo Nakamura · Staff Writer
· 3 min read
Apple options earnings bets are leaning bullish ahead of the company’s Thursday report, a setup that matters because Apple is one of the few mega-cap names still trading near record levels while the broader U.S. market has struggled. Options data from several market services show traders paying up for upside exposure, while the market is also pricing in a bigger post-earnings move than Apple has typically delivered over the past year.
Apple shares have gained 20% from a late-June low, according to CNBC, after spending roughly seven months with little progress. The stock recently traded less than $2 below an all-time high reached a little more than a week earlier. Apple was quoted at $334.32 in after-hours trading, up 0.39%, while its regular-session close was $333.02, up 3.53%.
What are Apple options traders betting before earnings?
Options are contracts that let traders bet on, or hedge against, a stock move without buying or selling the shares outright. Calls generally gain value when a stock rises, while puts generally gain value when it falls.
On Friday, $590 million in Apple options premium changed hands, and $442 million of that was tied to calls, according to SpotGamma. ThinkOrSwim data showed traders bought almost 560,000 calls, compared with 332,000 puts. That call-heavy activity points to stronger demand for bullish exposure heading into the report.
The pricing of those contracts also shows traders expect more movement than usual. Apple options imply an almost 4% swing after earnings, according to Cboe LiveVol data cited by CNBC. That is well above Apple’s average historical earnings-related move of about 1% over the past year, based on the same data.
Nigam Arora, founder and author of The Arora Report newsletter, told CNBC he thinks Apple has a strong chance to help steady the market this week. Arora said investors are treating Apple as a defensive stock because, unlike several peers, the company is not spending hundreds of billions of dollars on artificial intelligence capital expenditures, which means long-term spending on AI infrastructure.
Where the biggest trades are sitting
The largest Apple options trade on Friday was a new $2.6 million position in $280-strike calls expiring in mid-August, according to CNBC. The trade had a delta near one, meaning its price should move almost dollar-for-dollar with Apple stock. In plain English, that kind of call can act as a stock substitute for a trader who wants exposure without buying shares directly.
For options expiring this Friday, the $320 strike had the largest open interest, according to BarChart data cited by CNBC. Open interest means the number of outstanding contracts that have not been closed or settled. At that strike, there were 13,000 calls and 5,000 puts.
Friday’s most actively bought contract by volume was the $300-strike put, with 7,500 contracts traded for $374,000 in total premium, according to SpotGamma. The next most active was the $340-strike call, with 5,000 contracts totaling $2.3 million in premium.
That $340 call cost $4.25 at Friday’s close, CNBC reported. For buyers of that contract to break even by expiration, Apple would need to rise 3.4% this week and move past its record high of $335.
This story draws on original reporting from CNBC.
