AAPL Calls Are Running Hot And Running Late

The Option Pit VIX Light Is Red, Volatility Will Drop.


Hey Traders,


Every now and again I like to venture into equity vol.


Let me tell you about Apple (Ticker: AAPL).


You know the stock was up big on Tuesday.


What you do not know is that the activity in the stock and volatility are presenting some HUGE opportunities.


Let me explain what is going on.


I like to joke that there is a VIX for everything.


There is a VIX for oil: CBOE Crude Oil Volatility Index (Ticker: OVX).


A VIX for gold: CBOE Gold Volality Index (Ticker: GVZ).


There is a VIX for the Dow Jones Industrial Average: CBOE DJIA Volatility Index (Ticker: VXD).


There is also a VIX for some equities.


CBOE Equity VIX on Apple (Ticker: VXAPL) is the VIX for AAPL options.


Right now,  the AAPL VIX is cheap:



While the index is up from its lows, at 29.15%, the index is CHEAP.


How do I know?


Take a look at the volume in AAPL options.


On Tuesday, AAPL traded about 1.25 million call contracts …


Now look at the option volume on the weekly options expiring Friday:



Between the 155-strike, 157.5-strike and 160-strike calls, we have 400,000 contracts traded … good for a little less than one-third of all call options traded.


And if you think this doesn’t matter,  look at the stock:



AAPL has been having gaps (big one-day moves).


While this volume persists, that action is going to continue to happen.


However it tends to happen one week late.


Last week the 155-strike calls were hot, and the stock held under 155.


With a new week, the stock jumped, and the 157.5-strike calls were hot…


Now, I expect AAPL to hang around 157.5 …


Only to jump next week …


I would be a buyer of the Sept. 17 157.5-strike calls …


I think they will pop on Monday morning next week.


Your Only Option

Mark Sebastian

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