Apple Stock: Ahead Of Earnings, Find Out All That The Options Market Has To Say

Apple Inc AAPL shares closed 2.84% higher on Thursday, in line with the broader market performance as investors and traders chose to focus on upbeat tech earnings that overshadowed any concerns over weakness in the economy.

The stock has gained over 34% since the beginning of the year. This compares with an almost 17% rise in the Nasdaq Composite in the same period. With the iPhone maker scheduled to report its quarterly earnings next week, here's a look at crucial trading levels factored in by the options market:

Also Read: Everything You Need To Know About Apple Stock

1. Resistance: Options expiring on May 5^th indicate maximum open interest accumulation amongst out-of-the-money Call strikes at the $170 level. This is interesting because shares of Apple closed Thursday's session at $168.41. If the open interest levels at this strike increase next week while the stock remains closer to this level, there is a decent chance that it may fail to breach the $170 mark in the short term. The next resistance level is being factored in at the $175 mark.

2. Support: On the downside, options data shows that the $165 Put strike is getting decent open interest accumulation. If the figures continue to rise, it would indicate traders are increasingly getting confident that the level will hold the fort as support next week.

However, as earnings are scheduled to be released on May 4, volatility is expected to increase and any big divergence in earnings compared to estimates may lead to significant stock price movement on either side. Furthermore, open interest figures sometimes shift as the week commences or after a major news break. Hence, it would be worth watching the option strikes, both Calls and Puts, that get the maximum open interest accumulation. Avoiding naked or unhedged positions in options this week would be a prudent strategy.

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