Large Apple Option Traders Kick Off 2020 With Heavy Call Buying

Apple Inc. AAPL was one of the hottest stocks in the market in 2019, gaining 89% and reaching a $1.3 trillion market cap.

On Thursday, a flurry of large Apple option trades were more bullish that bearish, suggesting smart money is expecting Apple to continue to outperform heading in 2020.

The Trades

On Thursday, Benzinga Pro subscribers received 45 option alerts related to unusually large trades of Apple options. Here are a handful of the biggest:

• At 10:43 a.m., a trader sold 1,451 Apple call options with a $320 strike price expiring on June 19 near the bid price at $11.60. The trade represented a more than $1.68 million bearish bet.
• At 11:03 a.m., a trader sold 1,000 Apple call options with a $300 strike price expiring on April 17 at the bid price of $15.60. The trade represented a more than $1.56 million bearish bet.
• At 11:38 a.m., a trader bought 740 Apple call options with a $350 strike price expiring in January 2021 near the ask price at $13.25. The trade represented an $980,500 bullish bet.

Of the 45 total large Apple option trades on Thursday morning, 33 were calls were purchased at or near the ask or puts sold at or near the bid, trades typically seen as bullish. The remaining 12 trades were calls sold at the near the bid or puts purchases at or near the ask, trades typically seen as bearish. The three largest trades of the morning were all bearish.

Why It's Important

Even traders who stick exclusively to stocks often monitor option market activity closely for unusually large trades. Given the relative complexity of the options market, large options traders are typically considered to be more sophisticated than the average stock trader.

Many of these large options traders are wealthy individuals or institutions who may have unique information or theses related to the underlying stock.

Unfortunately, stock traders often use the options market to hedge against their larger stock positions, and there’s no surefire way to determine if an options trade is a standalone position or a hedge. In this case, given the relatively large size of the largest Apple trades and the fact there were so many large trades make it likely that at least some of the trades were institutions hedging against large positions in Apple stock.

5G iPhone Ahead?

The large option trades in Apple come after Gene Munster told CNBC Apple shares have another 40% upside in 2020.

"I think this idea of a consumer staple tech company should garner a higher multiple," Munster said on Benzinga's PreMarket Prep in late December. "So ultimately I think the stock can go higher. I think it's a $350 or $400 stock."

Positive trade talks may also help propel Apple’s stock in 2020. On Tuesday, White House advisor Peter Navarro told CNBC a phase one trade deal with China is “in the bank.”

Benzinga’s Take

Many investors are expecting Apple to release its first 5G iPhone in 2020, which could be a major potential upgrade catalyst for current iPhone users around the world. Given Apple’s huge 2019 gains, market expectations for the near-term are clearly high, but all the bullish option trades on Thursday suggest smart money sees more upside ahead for Apple this year.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

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