While the rest of the market has been caught up in the omicron/ARK Innovation ETF (Ticker: ARKK) sell-off, cult stock Apple (Ticker: AAPL) appears to be immune to the turbulence … setting a string of record highs as the rest of the market struggles to stay afloat.
Of course, news that CEO Tim Cook had previously inked a $275 billion deal with China certainly didn’t hurt the shares, sending them to their first over-$170 finish.
Options traders have been noticing this trend as well, and this cult stock’s pits have been getting positively hammered.
On Tuesday, AAPL’s pits saw 238% of their normal daily volume … and calls outpaced puts nearly three-to-one.
Where is all this money flowing to?
AAPL has been tearing higher even as the rest of the market has struggled to tread water – or worse.
The shares closed on Tuesday up 3.5% at a new all-time high of $171.18:
Chart courtesy StockCharts
AAPL’s steady movement, coupled with the fact that AAPL volatility is rather surprisingly cheap right now, in the bottom third of its annual range, may be part of why the tech stock is getting positively swarmed in the option pits.
On Tuesday, it looked like some – or perhaps one – very Big Money trader was snapping up specific AAPL plays en masse.
The December 10 170/175 call spread was targeted, with the 170-strike calls purchased for about $2.80, while the 175-strike calls were sold for about $0.55. This brings the cost of each spread to $2.25. The largest simultaneously-purchased block of this spread was about 5,000 contracts (though 4,999 crossed the tape just 10 minutes later), which required an outlay of $1,275,000.
This trader (or traders) also hammered the December 23 170/180 call spread, purchasing the 170-strike calls for $3.85, while selling the 180-strike calls for $0.85. The largest block to cross the tape was 4,911 contracts, which would have required an outlay of $1,473,300.
This bodes bullishly for AAPL in the near-term, with the trader betting the shares will be able to maintain over $170 through Friday’s expiration, and with further potential upside through the December 23 expiration.
These trades were also paired with a sale of the December 31 160-strike calls, likely closing a previously-opened long position, and rolling it into the December 31 170-strike call position.
This roll allowed the trader to close their 160-strike calls for about $12.10, and re-open at the higher strike for $5.10. This means the trader collected a profit of $7.00 on each contract, and will still be able to take advantage of further AAPL upside through the end of the year.
These were far from the only spreads traded on AAPL during Tuesday’s session, but they were some of the largest volume trades.
However, one outright bull also opened a colossal bet on the tech giant, with this trader buying 35,075 contracts of the March 2022 200-strike calls for about $2.50.
Even with AAPL volatility a relative bargain, someone is pouring some big bucks into this AAPL bet. At a total of $8,768,750, that’s one of the largest bets the AAPL pits have seen all year, and it’s betting the stock sees an additional 16% of upside before March.
Looking at its track record … this trader could be set to make quite a bit of money come March 2022.
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