Wednesday’s Notable Options Activity: $AAPL, $EA, $GLW

by Dan March 12, 2015 7:11 am • Commentary

Here is some generally directional, untied options activity that caught my eye during Wednesday’s trading:

1. AAPL – shortly after the open when the stock was $122.88 a trader paid 44 cents for the April 121.43 / 117.14 1×2 put spread 5,000 by 10,000.  This trade breaks-even down at $120.99, with profits up to $3.85 between 120.99 and 113.29 with max gain of $3.85 at $117.14.  The worst case scenario is that the stock is bellow $113.29 and the trader loses the 44 cents premium paid for the structure and has losses below.  Above $121.43 the trader losses the 44 cents in premium.

The stock is now down 8.5% from the all time highs made on Feb 24th. We highlighted some call volume the day to that (read here), but also highlighted what appeared to be increasingly stretched technical set up:

AAPL – the stock continues its meteoric rise to new all time highs, closing up 20% on the year, up 27% from its Jan lows and quickly approaching the $800 billion market cap mark.  While it’s been a fools errand to stand in the stock’s way for more than a year, the steepness of the recent ascent may be getting just a tad overdone:

AAPL 2 year chart from Bloomberg

Yeah I know, blind squirrel, broken clock…..blah, blah, blah.

At this point a pullback to the prior breakout level at $120 is coming to a theater near you, a level that many pundits suggested that they would back up the truck, buy hand over fist, blah, blah, blah. Let’s see how the stock acts when it gets there as there is little support for another 4% until $115 with next support at $110:

AAPL 6 month chart from Bloomberg
AAPL 6 month chart from Bloomberg

2. GLW – has fallen off a cliff in the last week, down almost 9%.  When the stock was $22.73 a trader paid 1.18 for 10,000 Jan 2017 30 calls to open.  These calls break-even in a little less than 2 years up 37%, a level the stock has not traded at since 2001.  The six month chart below shows the stock’s break of the uptrend that has been in place since mid October:

GLW 1yr chart from Bloomberg
GLW 1yr chart from Bloomberg

3. EA – saw an opening bearish trade when stock was $55.66 a trader paid 1.04 for 3850 April 2nd weekly 55/50 put spreads. Trade breaks-even at $53.96, with max gain of 3.96 at $50 or lower.  What’s curious about the trade is choice of the April 2nd weekly expiration. Looking at the company’s investor relations site there are no scheduled events between now and then.