Apple Investors Rush to $225 Call Options as iPhone Maker Defies Stock Market Sell-Off
$Apple(AAPL.US$ investors are rushing to call options that give the holders the right to buy the stock near its current level as the iPhone maker displays its financial strength amid a wider stock market sell-off that was fueled by fears of a recession.
Shares gained more than 2% at a time when the $S&P 500 Index(.SPX.US$ slipped 2%, while the tech-heavy $Nasdaq Composite Index(.IXIC.US$ fell 2.3%. Late Thursday, Apple reported record fiscal third quarter revenue that beat analysts' estimates, and better-than-expected earnings.
Earnings for the three months ended June 29 rose 11% to $1.40 a sha re, compared with the average $1.35 of analyst estimates compiled by Bloomberg. Revenue gained 5% to $85.78 billion, better than the $84.46 billion expected by Wall Street.
About 174,520 call options that give the holder the right to buy Apple stock at $125 changed hands across 19 expiration dates tracked by moomoo that stretches through Dec. 18, 2026. That makes that strike price the most popular among contracts linked to the iPhone maker.
Most of those call options are expiring today and next Friday, as the stock price, now at $223.86, moves closer to that strike price.
The company's financial results signal "the best is yet to come," Bank of America Securities said Thursday in a report. BofA analysts see upside in iPhone sales and services revenue from the upcoming roll out of Apple Intelligence, with significant acceleration seen in the December quarter, MT Newswires quoted BofA as saying.
Institutional investors are also loading up on bullish options. The biggest of the unusual trades tracked by moomoo involved a buyer paying a $5.13 million premium for call options that give the holder the right to buy 259,000 Apple shares at $205 each by the close of market today. Investors who sold covered call options could buy them back before their holders from exercising the contracts to snap up the shares at that price.
While BofA kept its $256 price target on Apple stock, at least four other analysts boosted theirs partly on gains in iPad and Mac sales, according to the report.
Apple Chief Financial Officer Luca Maestri said in Thursday's earnings release that the company's installed base of active devices reached a new all-time high in all geographic segments.
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Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
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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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104692956 : yea, AAPL is great no doubt, however should mkt fall further, AAPL will find it harder to hold at such rich valuation
Alen Kok : k
webguybob 104692956 : agreed