Apple's Record-Breaking Rally Boosts Appeal of Call Options Amid AI Optimism
$Apple (AAPL.US)$'s record-breaking rally is boosting the appeal of the iPhone maker's call options as a slew of good news bolstered investor confidence on the company's prospects.
The stock rallied as much as 1.2% to an all-time high of $250.80 amid reports that the company is developing its first server chip designed for artificial intelligence and is working with $Broadcom (AVGO.US)$ on the chip's networking technology.
News of Apple's plans for its AI server chip came as the company launched new AI features on its devices including the integration of ChatGPT into writing tools and Siri. Those AI features "could reignite consumer interest over the next several months," helping push more iPhone users to upgrade their device next fall, Bloomberg Intelligence analysts Anurag Rana and Andrew Girard said in a note Dec. 11. IPhone sales account for more than half of Apple's revenue.
Call options that give the holders the right to buy Apple's stock at $250 in two days were the most popular options, with more than 71,900 contracts traded so far. That's more than double the open interest of 33,040, and above the volume of 63,480 reached Monday.
The higher demand likely includes covered calls sold by shareholders that were bought back before the holders of those contracts exercised them.
Analysts, on average, expect Apple to report $71.2 billion in iPhone sales in the current quarter ending this month, higher than the $69.7 billion posted a year earlier, data compiled by Bloomberg show. Shares climbed 29% this year amid optimism that the full roll out of Apple Intelligence on iPhone 16 would spur a bigger upgrade cycle that would bolster revenue.
As of 1:21 p.m., more than 737,000 Apple call and put options were traded across 19 expiration dates that stretch through Jan. 15, 2027. That makes Apple the day's fourth most active stock option behind $NVIDIA (NVDA.US)$, $Tesla (TSLA.US)$ and $Alphabet-A (GOOGL.US)$. (To see the options ranking, click here.)
Apple also plans to bring satellite connections to its smartwatch in 2025, and the company is bolstering the health and safety features of its products, Bloomberg reported, citing people familiar with the matter. That further adds to appeal of the company's products that have gained a massive following.
Wearables, including smartwatches, home and accessories account for about 9.5% of Apple's total revenue.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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Alen Kok : okay