Apple Weekly Options & The iPhone 5 Event
Apple is holding a special event this afternoon presumably to launch its newest iPhone iteration, the iPhone 5. While investors have assumed the company would be releasing the newest iPhone in the Fall, there has been, as there always is, some disagreement as to the characteristics and specifications of the new phone. Analysts will be most focused on the following items during the 1:00 pm ET presentation:
Apple iPhone 5 Market Expectations:
- Dual-Core A5 Processor?
- 1GB of RAM for Multi-Tasking?
- Advanced Voice-Controlled Functionality?
- Sprint Gets The iPhone 5?
- 1080p HD Video?
- Lower priced iPhone 4?
I don’t know about you but I don’t see many market moving items in this list for shares of Apple (AAPL), maybe Sprint, but not Apple. The market disagrees with my sentiment as Apple weekly options are currently pricing in a roughly 5% move on the special event (AAPL Weekly 375 straddle closed yesterday at $18.65).
We’ve been down this road many times with Apple, and I believe special event volatility in Apple is starting to lose its luster. Over its last 3 special events shares of AAPL failed to move more than 2% during and following the presentation into the close, and looking at the list of expectations I don’t foresee this particular event being any different.
Implied volatility in AAPL options continues to creep higher into the event and earnings (~10/18) currently standing at 62% while historical realized hovers around 28%. A graph of implied volatility in AAPL options, courtesy of the CBOE website, is included below:
I see this as a perfect opportunity to sell weekly AAPL volatility against long stock positions. I would consider selling the at-the-money weekly straddle, which closed yesterday at $18.65 (62-vol), as we get closer to the 1:00 pm ET special event and look to sell out of the position before the close, assuming implied volatility levels decline meaningfully following the conclusion of the event.
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- Weekly Options Update: FSLR Primed For Further Downside?
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Mr. Saunders serves as Mesa’s Vice President of Marketing, bringing with him a wealth of experience in strategic marketing and operations. In this role, Mr. Saunders is responsible for overseeing all marketing activities, utilizing a blend of traditional and digital strategies to enhance brand presence and profitability, managing a multi-million dollar marketing budget across various media platforms, and leading the continued implementation of CRM systems to streamline customer engagement and drive business growth.