Yo Pit Crazies,

So Apple Inc (Ticker: AAPL) produced an AR Headset for $3400. I guess they wanted something more expensive than the iPhone that their audience does not have.

Check the audience reactions on Twitter yesterday – underwhelming at best. 

Facebook changed to Meta Inc (Ticker: META) over a year ago to much fanfare to ride the AR wave. The stock went to $80 and only recovered recently when they pulled a Twitter and started to layoff employees to become profitable again.

As feature packed as the new AR headset might be, there is something more interesting in the option premiums for AAPL.

Let’s jump on through and see.

AAPL IV Is at a Two Year Low

Normally, stocks at all time highs produce lower implied volatility in the options. That’s because call sellers come in to generate income against a large capital gain in the stock. That reduces options prices, both calls and puts.

AAPL had a $6 move intraday yesterday, which is a 48% realized volatility move. The options are trading in the 20% range. The steep AI rally over the last few weeks created a massive vol compression.

AAPL 1 Year IV with 30 and 60 day charts

I like AAPL for a strangle here. AAPL turnaround yesterday was pretty steep but about the same for most of the developer conferences it’s had over the years. 

The bigger issue is AAPL growth in the coming years with underwhelming products and the current multiple on the runup. That could be a short term volatile mix.

The AAPL trade could go into the Easy Button in our Tuesday class.

To Your Trading Success,

AG