Options Flow Summary: AAPL & AMT

---

This is another up day with the market getting a boost from strong GM earnings.  The volume remains strong with 4.7 million single stock option contracts traded by noon.  The CBOE VIX index is slightly lower to 20.67, as the fear of large price swings dissipates.

Apple Inc (AAPL)
Apple is down 3.6% to $135.86 today as it continues to dominate single stock activity. More than 300,000 contracts have traded by noon.  The flow is characterized by call and put sellers willing to sell into increasing implied volatility in the name.  More than 30,000 August 130 puts have traded so far, with the majority initiated by sellers at prices near $2.50.  We are also seeing selling in August 140 and 145 calls, with more than 20,000 of each on the tape.

At-the-money implied volatilities in AAPL options are trading in the 44% range.  Traders adding to positions at these levels are expecting realized volatility to remain in the historical 25-35% area.  This will allow them to realize positive time decay over the next several weeks.

ADVERTISEMENT
American Tower Corp  (AMT)
Earnings are due on Thursday and AMT options have been trading much greater volume than normal over the past two weeks.  Todayís activity (nearly 12,000 contracts) is 4 times the average daily volume for AMT. This activity has been concentrated in the September 42.5 calls. 10,000 of these calls traded just after 10am on the ISE for $2.35 in a bid-side transaction. 

The stock is trading near $42.09 and implied volatilities have been lifting recently.  This is based on general market conditions and buyer-dominated order flow.  Todayís flow suggests one institutional player is comfortable assuming earnings risk. This player believes implied volatility levels will exceed the risk of a large earnings related move.


"

---

View Henry Schwartz's post archive >