Monday at 1pm eastern Tim Cook takes the stage at their annual World Wide Developers Conference. Its been a busy week for Apple leading up to the event, kicked off by what seems some well placed rumors of what exactly the new products will be at next week’s meeting to their official announcement of their $3 billion acquisition of Beats, all of which has fueled 4.5% gains for the stock so far in the shortened holiday week.
As most market participants have become aware of during Apple’s historic run over the last decade, the stock has traded largely on the prospects of new category defining/leading products. WWDC is one of the only pre-scheduled events for the company where they focus on their products and usually launch new ones (when the company was on their summer iPhone release schedule it was at this event, but they’ve recently moved away from large splashy hardware intros at WWDC and now primarily focus on just software) so the stock has historically been bid up into the event. Below is the dates and the price action of Apple shares in the 10 days prior and the 10 days after WWDC for the last 4 years with WWDC day circled:
WWDC 2013 -June 10th: the stock was down small into the event, an intra-day reversal lower after the event and then down almost 6% in the 10 trading days after, 2.7% peak to trough reversal on day of:
WWDC 2012 – June 11th: The stock was up small into the conference, up small out of it, but had a large intra-day reversal lower after it ended, 3% peak to trough reversal on day of:
WWDC 2011 -June 6th: The stock was up ~2.5% into the event and down ~5% in the days following, also with a big intra-day reversal after it ended, 2.5% peak to trough reversal on day of:
WWDC 2010 – June 7th: the stock was up ~6% in ten days prior, reversed and closed on the lows the day of, and closed about 9% higher 10 days after: 3.3% peak to trough reversal on day of:
And in the ten days prior to Monday’s event, AAPL is up about 8.5%:
The big question is, how does the stock open Monday, how does it trade during the event, and will it reverse about 3% from the highs during the key note event, which it has done over the last 4 years?
From an options standpoint, 30 day at the money implied vol has ticked up this week with the stock’s healthy gains, the Beats news and anticipation of new products at WWDC.
The rumors this time around seem to center on a new Mac operating system (not a stock mover) and some sort of Smart Home ecosystem (along with the scheduled stock split probably the factor moving the stock higher.) So, if history is any guide, you would want to sell the strength before Tim Cook drops the mic and look to cover your short down 3%. We would be inclined to trade it with weekly puts Monday during the event, but will need to be quick as Implied Vol will come in hard, Maybe. Why Maybe? Well, investors may start to quickly snap up calls in anticipation of the following Monday’s (June 9th) 7 for 1 split.
Monday morning if the stock rallies back to today’s highs near $644 would look to make a quick day trade with weekly puts, Stay Tuned.