Apple saw a few large blocks of calls and puts trade in October options on Monday and Tuesday this week, much of which was adjusting former bullish positions highlighted, but wanted to take a look at the positions with a focus on the new positions that are currently open. I do not have any visuals this time, all data, but very interesting activity.
Overall in Open Interest Apple came into Friday with 1,807,886 calls and 1,255,086 puts open.
There were not any large impactful trades Friday in these options and into Friday the notable Open Interest (rounding) was at the $600 calls (13,825), $630 Calls (20,975), $650 Calls (18,810), $680 Calls (10,900), $700 Calls (17,555), $710 Calls (10,275), and $755 Calls (29,800).
In the puts the notable Open Interest was in October $600 (11,120) and October $550 (19,470)
Looking at each of these strikes individually to see this month’s change in Open Interest:
- October $600 Calls Open Interest 14,472 to Start the Month – Relatively Unchanged
- October $630 Calls Open Interest 3,500 to Start the Month and 13,000 Added this Week
- October $650 Calls Open Interest 11,560 to Start the Month So Just Under 5,000 Added this Week
- October $680 Calls Open Interest 1,670 to Start the Month and More than 6,000 Added this Week
- October $700 Calls Open Interest 9,074 to Start the Month and Just Under 5,000 Added this Week
- October $710 Calls Open Interest 25,512 to Start the Month so Roughly 16,000 Closed this Week
- October $750 Calls Open Interest 9,759 to Start the Month and Roughly 19,000 Added this Week
- October $550 Puts Open Interest 6,650 to Start the Month So 13,000 Added this Week
- October $600 Puts Open Interest 5,620 to Start the Month And 3,300 Added this Week
Now looking at the trades made this week and the resultant impact to Open Interest:
- August 20th – 10,440 October $475 Short Puts Bought Back (OI was 14,337) at $0.84 and 5,520 October $550 Puts Sold to Open at $2.97; 10,440 October $710 Calls Closed at $14.10 and 10,440 October $750 Calls Bought at $6.50 (Accounts for Notable OI Changes Above). Also 5,220 October $615 Calls Closed at $61.85 and 5,220 October $630 Calls Bought at $51.45 to Open.
- August 21st – 6,000 October $550 Puts Sold to Open; 6,000 October $615 Calls Sold to Close at $56.91; 6,000 October $630 Calls Bought to Open $46.80 (Accounts for Full $630 Call OI Change with Prior Day); Also, 12,000 October $710 Calls Sold to Close $11.52 and 12,000 October $750 Calls Bought to Open $5.05
Summary:
On July 5th a large Institutional trader sells 10,440 October $475 Puts to Open at $4, a $4,176,000 credit, and buys 22,440 October $710 Calls at $7.65 for $17,166,600, a net debit of $12,990,600. Apple closed trading on July 5th at $607.33.
Furthermore this position was also an adjustment as the trader bought back 9,250 October $450 short puts at $2.66 and sold 10,800 October $725 long calls at $6, a $4,019,500 credit and rolled into this new position on July 5th willing to be long (short puts) at a higher cost ($475) and wanting a higher Delta on the long calls.
With the August 20th/21st adjustment the trader bought back the short October $475 puts and Sold the October $550 puts to open, net on that trade +$762,480 in credit. The trader closes 22,440 October $710 calls for a Net $28,557,090 and opened 22,440 October $750 calls for $13,890,000.
In conclusion this trader has netted more than $15 million since the July 5th trade, and that trade had already been profitable from a prior adjustment. As it stands now this trader is short the October $550 puts and long the October $750 calls in size as we near the launch of the iPhone 5 and iPad Mini.
Apple still trades at a very cheap valuation ex-cash and this traders sees more upside, so the question is, Would You Bet Against a Trader that Banked $15M in One Spread in A Month and a Half?
I would not….and this should also be a lesson about “Let Your Winners Ride” and Also for Option Traders how to Adjust Positions and Stick with a Trade!
And then there is that other trader that added 13,000 October $630 calls this week, rolling up from the $615 strike.
Apple should be heading to $800+ in the next few months….