Is AAPL Preparing To Squeeze Higher?

The Option Pit VIX Light Is Red, And Volatility Is Likely To Drop.


Hey Traders,


I do not usually talk about equity options in the VIX Edge.


But I want to point out something really unusual happening in Apple (Ticker: AAPL).


Over the last two days, there has been an absolute explosion in AAPL’s option pits.


Volumes are exploding, and they are exploding in one specific contract.


I am going to tell you what is happening …


And how to play it.


On Tuesday, the market was down — at its lows, the S&P 500 was down 1.25%, and the VIX touched over 19.


You might think on a day like this, I would have a ton of VIX to discuss.


I do, and I’ll get to that tomorrow …


Today, though, I NEED to tell you about what is happening in AAPL, because I think it presents a real opportunity to clean up by playing the right options …


Like I said, volume is exploding in AAPL.


But that’s not true everywhere …


Rather, volume is exploding in options expiring this week! 


Take a look at what August options did on Monday:



In four strikes, AAPL traded about 1 million contracts!


Today, more of the same:



In those same four strikes, there were about 700,000 contracts traded …


This caused option implied volatility (IV) to completely pop today.


Take a look at the CBOE Equity VIX on Apple (Ticker: VXAPL) over the last two days:



After coming down to the 24 range following AAPL’s earnings, VXAPL is right back to levels we saw before earnings were announced.


VXAPL now stands over 30 … pushed higher by options that expire in 3 days!


So how do I play it?


I think we are set for a huge gamma squeeze in AAPL.


If AAPL is up today, we could see AAPL explode higher.


I am talking about as high as $155, maybe higher.


With all of this trading in calls (which were almost all buys) …


If AAPL starts moving higher, the options trading will push the stock even higher.


So how do I play it?


Watch the stock this morning …


If it opens green, look out.


With IV so high in options expiring on Friday, I would swoop in and buy the August 152.5-strike calls (we bought these in Robinhood Trader FYI).


They could jump from $0.55 to … who knows how high.


Your Only Option,


Mark Sebastian

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