Get Another Bite of This Apple
02/28/2014 8:00 am EST
After a disappointing first quarter earnings report, Apple stock swooned, and Mark Sebastian of OptionPit.com offers an options trade based on cheap Apple implied volatility levels.
Every so often, typically a few weeks after AAPL earnings, traders go a little overboard in selling AAPL option premium. Well, it's been a few weeks since AAPL earnings, and traders have sold AAPL IV down to stupid cheap levels...again. Take a look at a chart of VXAPL (the VIX of AAPL).
Every time traders take AAPL vol down like this, it ends up biting them in the hind quarters. I think there is a strong chance that AAPL IV will start to get a bid and/or the stock will start to move. In either case, owning options looks like a decent play at these levels
By Mark Sebastian, Blogger and Contributor, OptionPit.com