Apple Options Market Signals Bullishness Ahead of Earnings, Implied Volatility at One-Year High, Stock Near

Apple will report its latest fiscal quarter earnings after the U. S. market close on Thursday. Ahead of the results, the options market shows a bullish tilt in trading activity. Last Friday, total options premium reached $590 million, with $442 million tied to call options. Call contracts traded totaled about 560,000, while put contracts numbered roughly 332,000.

The largest single trade that day was a trader opening a new call position with a strike price of $280 and mid-August expiration, for a total premium of $2.6 million. The option's delta was near 1, making the position effectively equivalent to holding the underlying stock. Based on open interest for options expiring this Friday, the strike price of $320 holds the largest open interest, with about 13,000 call contracts and 5,000 put contracts.

The two most active options expiring this Friday were: the strike $300 put, with 7,500 contracts traded and total premium of about $374,000; and the strike $340 call, with 5,000 contracts traded and total premium of $2.3 million. Based on Friday's closing price, the $340 call was quoted at $4.25, meaning the buyer needs Apple to rise about 3.4% and break above the previous all-time high of $335 to become profitable.

Apple's stock has been flat in the first seven months of the year, but has risen more than 20% from its late June low, and is now less than $2 from its previous record high. Against the backdrop of the overall U. stock market being in a sideways consolidation for nearly two months, rising Treasury yields, and mixed earnings results from large-cap tech stocks, Apple is the only stock among the top 10 S&P 500 components that is trading near its all-time high. Options pricing implies a post-earnings move of nearly 4%, far above the historical average of about 1% over the past year.