Options market braces for big move in Apple shares after earnings

“The options market is bracing for a big move in Apple shares after it posts earnings on Wednesday amid what has been a dramatic plunge for the world’s most valuable publicly traded company,” Angela Moon and Doris Frankel report for Reuters.

“Based on options activity just hours before the announcement, due after the market close, traders were estimating about a 7 percent one-day move after the earnings, which would be a much more volatile outcome than normal for Apple,” Moon and Frankel report. “Such a move could push the shares as low as $465 or as high as $535, depending on how earnings come out.”

Moon and Frankel report, “‘Three ingredients make this earnings for Apple especially appetizing for options traders: (CEO) Tim Cook has missed earnings estimates 60 percent of the time over the past five quarters, the stock has crashed almost 30 percent since September, and no stock has as many hedge funds owning it,’ said Gareth Feighery, a founder of options education firm Markettamer.com in Philadelphia. ‘Combine those three factors together and Apple is a fireworks display ready to ignite, which makes it no surprise to see its options building in a move of close to 7 percent post-earnings.'”

Read more in the full article here.

19 Comments

  1. In any case, this is probably one of the more exciting moments for years for everyone with a direct or indirect stake in AAPL’s share price. I am very long the stock, and yesterday evening just before close, I set up a bullish call butterfly on the weeklies, which now (30 min before today’s market close), is up already by 55%. Tempting to sell and take the profits, but then a lot of tonights excitement is off. A blow-out performance at 22.30, and will go for more festive stuff than popcorn….

    1. That’s the part that makes me crazy.

      Apple has only “missed” in the sense that analysts’ estimates were blown away so often by Apple, the analysts started to make up crazy high numbers. Then surprise — the analysts were too high (numerically & chemically).

      If the analysts are always wrong, why is the street still paying attention to them?

      1. All excellent points.

        You gave me an idea — FUD B.C. and FUD A.D. — 2012 or 2013?

        “Then surprise — the analysts were too high (numerically & chemically).” Yup, they are wrong and Apple is punished for it. Surreal unreal.

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