Apple, Inc. AAPL shares have surged this week on high hopes for the iPhone 11, which was unveiled on Tuesday. Some large option trades on Wednesday suggest the new iPhone has put Apple on the radar of some deep-pocketed traders.
The Trades
On Wednesday, Benzinga Pro subscribers received eight option alerts related to unusually large trades of Apple options. Here are a handful of the biggest:
- At 9:57 a.m., a trader bought 520 Apple call options with a $225 strike price expiring on Jan. 17, 2020 near the ask price at $10.951. The trade represented an $569,452 bullish bet.
- Less than a minute later, likely the same trader bought 1,300 Apple call options with a $230 strike price expiring on Nov. 15 at the ask price of $5.50 cents. The trade represented an $715,000 bullish bet.
- Within seconds, likely the same trader bought 1,300 Apple call options with a $220 strike price expiring on Oct. 18 at the ask price of $6.901. The trade represented an $897,130 bullish bet.
- Two minutes later, a trader bought 540 Apple call options with a $220 strike price expiring on Sept. 20 near the ask price at $3.554. The trade represented an $191,916 bullish bet.
Of the eight total large Apple option trades on Wednesday morning, four were calls were purchased at or near the ask, trades typically seen as bullish. The remaining four trades were calls sold at the near the bid or puts purchases at or near the ask, trades typically seen as bearish. Each of the four largest trades of the morning, however, were all bullish in nature.
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 that they were executed in such rapid succession, they could easily be institutions hedging against large short positions in Apple stock.
Apple Headed Higher?
The large option trades in Apple come after the company unveiled its brand new class of iPhone 11 devices on Tuesday. The new iPhone launch has some traders optimistic about a large global iPhone upgrade cycle over the next year. Despite the external optimism, the only major insider trading at Apple in recent weeks has been CEO Tim Cook selling more than 260,000 shares.
The good news for Apple bulls is that, while there were both bullish and bearish trades, all of the biggest trades were bullish in nature, assuming they did not represent hedges.
Benzinga’s Take
The four largest trades specifically mentioned above totaled more than $2.37 million in combined call positions in Apple. The timing suggests all four trades came from the same trader. The fact that the expiration dates were spread out from September to January of 2020 suggests the trader is decidedly bullish on Apple, but may not necessarily be confident in when exactly the next leg higher will take place.
Do you agree with this take? Email feedback@benzinga.com with your thoughts.
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