Unusual Options Activity in Bank of Apple $AAPL

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Transcript of Unusual Options Activity in Bank of Apple $AAPL

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As many of you know, unusual options activity can be a valuable indicator as to

what traders are thinking, and more importantly, where these stocks are

heading in the short-term.

This is something professional options traders pay a lot of attention to, and for good reason… Unusual options activity can “tip off” big moves in a stock, either

up or down.

So let’s take a look at some ‘interesting’ activity that caught our eye this week:

Apple $AAPL is of course the world’s largest company – even after its recent

selloff. The company’s immensely popular products set the standards in both the retail and technology sectors.

$AAPL is trading at $115.26 at market close, down 6% in the last week but still

up over 5% for the year. That’s 14% below the 52-week high, and 25% from the 52-

week low.

AAPL hasn’t been the consistent climber we’re used to seeing over the last few years. The stock did make a big move higher earlier in the year. However, it’s

been mostly sideways action for the last six months… until this month’s earnings.

For the first time in several quarters, AAPL’s earnings disappointed investors. Growth just wasn’t what investors have come to expect. And, there really was very little detail regarding Apple Watch

sales.

Investors were hoping to get more data about the company’s newest product.

Here’s the deal…

This week, a trader sold a large block of puts on AAPL. Keep in mind, a put option makes money when the underlying stock

More specifically, a trader sold about 9,000 September 110 puts for $2.81. The

total cash collected for this trade is roughly $2.5 million. Breakeven point for

the trade is $107.19.

A trade like this could be two things

. It could be a bullish or neutral bet suggesting the stock won’t fall below

$110. Or, it could be the closing of a long put trade for a profit. Either way, the trade

implies the stock is done with its recent selloff.

As you can see, AAPL was mostly trading sideways until earnings last month.

Subsequently, the stock took a nosedive about 10 points lower. It’s farthest the

price has been below the 50-day moving average in quite some time.

The funny thing is, the earnings report for AAPL wasn’t all that bad. It just wasn’t what investors have come to expect. There’s no reason to believe the share price won’t bounce back once rational

expectations return.

This put sale, whether it’s closing or opening, is another strong sign that the

shares are at or near a bottom.

Keep in mind, there’s a lot more unusual options activity going on than what we

discuss here.

We just try to bring you what we feel are the most significant ones– and the ones you might actually be able to make some

money on!