“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.