There's heavy put open interest at out-of-the-money AAPL puts
After falling nearly 3% on Thursday, Apple Inc. (NASDAQ:AAPL) stock is down another 3.1% today to trade at $167.40. The latest pullback was sparked by a round of bearish analyst attention, with one firm calling for the end of the iPhone X. Morgan Stanley, meanwhile, trimmed its price target to $200 from $203, saying it expects iPhone shipments in the March quarter to fall short of expectations -- though it'd be a buyer of any post-earnings dip because of Apple's services business.
But AAPL remains above the key $165 level. This price point contained the stock's most recent pullback, representing a 10% discount to the equity's March 13 record high of $183.50. It's also home to the closely watched 200-day moving average. The security is back below the year-to-date breakeven level of $169.23, however.
Today's negative news cycle has options volume surging, with the 441,899 contracts that have already traded pacing for the 99th annual percentile. New positions are being opened at the about-to-expire April 167.50 put, while other traders are taking a slightly longer view, based on new positions opening at the weekly 4/27 170-strike call.
Coming into today, evidence suggests a number of traders have been betting on or bracing for an extended pullback in Apple stock, as the company prepares to report earnings on Tuesday, May 1. Specifically, the far out-of-the-money May 140 put saw the largest increase in open interest over the past 10 days, and the June 150 put is home to elevated open interest, as well.