Apple Investors Flock to $250 Call Options, Signaling Optimism for Continued Rally
$Apple(AAPL.US$ investors flocked to call options giving the holders the right to buy the stock at $250 in contracts stretching through December 2026, signaling optimism over longer-term outlook of the iPhone maker.
The $250 call options have a combined open interest of more than 296,000, the biggest tally of all outstanding Apple contracts for any strike price, including puts, data compiled by moomoo showed. The heaviest concentration of those calls are in options expiring on Jan. 17, 2025, with open interest of 78,000.
(To see Apple's options chain, click here.)
Those calls remain popular among Apple investors even as enthusiasm for big tech stocks started to wane. The tech-heavy $NASDAQ 100 Index(.NDX.US$ has fallen 3.7% over the past month. as investors debate whether the companies have overinvested in artificial intelligence and how significant its contribution to the bottom line will be.
Apple shares fared better, gaining 3.3% over the past month. For the fiscal third quarter financial results due Wednesday, analysts are looking for commentary from company executives on the impact of its recent AI initiatives to iPhone sales and their contribution to total revenue.
The company is expected to report a 3.3% growth in total revenue to $84.5 billion, rebounding from a 4.3% slump in the previous three months, analyst estimates compiled by Bloomberg show. Earnings are seen rising 0.7% to $1.35 a share from a year earlier, according to Bloomberg.
Among Apple options expiring in three days, the biggest volume is in call options giving the holders the right to buy the stock at $225, higher than the current stock price of $217.10. Volume rose to 20,442, surpassing open interest of 12,070. That could include Apple holders selling covered call options, helping send the contract price down 15%.
Apple Intelligence, as the company's AI is known, could spark a wave of upgrades from iPhone users, boosting revenue and earnings meaningfully, Baird analyst William Power was quoted by Bloomberg as saying. The analyst expects almost 95% of iPhones globally will need to upgrade to take advantage of the new technology, according to the report.
Baird raised its price target on the stock to $240, from $200 last week. On the other hand, JPMorgan analyst Samik Chatterjee has a December 2025 price target of $265 for the stock. Chatterjee sees upside opportunity with a longer AI-led replacement cycle bolstering Apple's earnings, Bloomberg reported last week.
More than 69% of 36 analysts who cover Apple have a buy rating on the stock, while 28% have it as hold. Meanwhile, technical indicators tracked by moomoo are split, with five of the 15 gauges showing that the stock could be oversold and the trend may be turning bullish while four are leaning bearish. Six are neutral.
"We see little risk of Apple not being able to meet 3Q consensus total sales growth estimates and anticipate management to point to similar growth in 4Q," Bloomberg Intelligence analyst Lucas Ramadan said in a note July 22. "We expect upbeat commentary about the initial reception from the developer community on recent AI initiatives that are core to the next iPhone launch."
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(To see the options market page, click here.)
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Former editor at Bloomberg, then Lazard Asset Management. Posts aren’t investment advice. Views are just mine.
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