Tuesday's Flurry Of Large Apple Option Trades Are Mostly Bullish Bets

A breakdown in trade negotiations between the U.S. and China has Apple, Inc AAPL investors uneasy in the past few weeks. Apple shares have been resilient, bouncing back by 5% in the past month.

Apple certainly had the attention of some large options traders on Tuesday, who were making some big bets on where the iPhone maker is headed next.

The Trades

On Monday, Benzinga Pro subscribers received 22 option alerts related to unusually large Apple trades. Here are a handful of the biggest:

• At 9:36 a.m., a trader bought 1,650 Apple put options with a $210 strike price expiring on Sept. 20 near the ask price at $5.651. The trade represented an $932,415 bearish bet.
• At 9:52 a.m., a trader bought another 2,523 Apple put options with a $210 strike price expiring on Sept. 20 near the ask price at $5.763. The trade represented a $1.454 million bearish bet.
• At 11:03 a.m., a trader bought 1,141 Apple call options with a $210 strike price expiring on Sept. 20 near the ask price at $8. The trade represented an $912,800 bullish bet.
• At 12:10 a.m., a trader bought 1,278 Apple call options with a $210 strike price expiring on Sept. 20 near the ask price at $8. The trade represented an $1.02 million bullish bet.

Of the 22 total large Apple option trades, 13 were either calls purchased at or near the ask or puts sold at or near the bid, trades typically considered bullish. The remaining nine trades were calls sold at or near the bid and puts purchased at or near the ask, trades typically considered 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 large number of trades and the fact that many of them were extremely large for a retail investor, it’s likely at least some of the activity came from institutions and may be hedges on large Apple stock positions.

Bullish Catalysts Ahead?

Assuming the majority of the large trades on Tuesday were not hedges, there was more bullish activity than bearish, although it was far from a unanimous consensus. The bullish option traders may have high hopes for two recent headlines from the Apple camp.

On Monday, the Financial Times reported Apple is now spending $6 billion on original TV and movie content, up from $1 billion reported in 2017.

On Tuesday, Apple officially launched its iPhone-integrated credit card along with partner Goldman Sachs Group GS. Apple iPhone users can apply for the card through the Wallet app and begin using the card immediately along with Apple Pay in stores and online.

Apple's stock traded around $211.78 per share at time of publication.

Related Links:

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