Apple’s stock has remained relatively stagnant for six months, but options traders are anticipating significant movement following the company’s upcoming earnings report. Implied volatility suggests a potential 3.5% swing, a notable increase from recent averages.
While call options are seeing higher trading volumes, historical data indicates a pattern of stock price declines after past earnings reports, creating a complex outlook for traders.
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For a stock that has seen minimal movement over the past six months, Apple (AAPL) has options traders buzzing with anticipation ahead of tonight's earnings report.
Current implied volatility suggests a potential 3.5% price swing following the earnings release. This is significantly higher than the average 1.8% move observed after Apple's last four quarterly reports. In comparison, other major tech companies like Amazon and Microsoft saw smaller-than-expected moves after their recent earnings, while Alphabet and Meta surpassed their implied volatility expectations.
While call volumes and premiums are currently leading put activity in Apple's options market, this doesn't necessarily signal a purely bullish outlook. More traders are reportedly buying calls at the asking price than selling them, a shift from earlier in the day when the bid-ask spread was more balanced. This indicates a growing interest in call options, but the underlying sentiment remains nuanced.
Several large individual trades have been noted. One trader secured nearly $1 million in premium by selling both $290 and $300-strike calls for the December 18 expiration. Another substantial trade involved selling both the 240 and 250-strike calls expiring May 15, generating over $3 million in premium.
However, historical data presents a cautionary note for bears. Apple's stock price has declined after five of its last six earnings reports and seven of the last ten. This pattern suggests a tendency for the stock to underperform in the immediate aftermath of earnings announcements.
Despite the historical precedent, the current options flow is not as uniformly one-sided as seen in previous earnings events. Evidence suggests that at least one major trader was willing to pay a premium above the market asking price for 320-strike calls expiring July 17, totaling $330,000, indicating a belief in a potential upward move despite broader market uncertainties.
