) debate gets more ferocious ahead of Q1 earnings next week, the
options market is getting more and more jittery. Today's chart
shows that 30-day implied volatility in AAPL is now near 2-year
Two-year chart of AAPL 30 day IV, Courtesy of LiveVolPro
It has rallied ahead of earnings, but this is actually the highest
it has been ahead of earnings at any point. The only time implied
volatility was higher was due to macro concerns in the fall of
2011, when the
(INDEXCBOE:VIX) got all the way to 48.
Naturally, this has occurred as realized volume has also moved
higher, but 30-day realized volume in AAPL is only around 30,
around the midpoint of its 2-year historical volume. So option
traders are placing a lot of emphasis on next week's earnings
report, and expecting a bigger move than usual.
Of course, with the stock at $400, a $30 move is bigger in
percentage terms than a $30 move when the stock was at $600. But
part of it is certainly because the stock is down more than 20% in
2013, and this is the first update from the company on trends so
far this year. Regardless, capitulation from around these levels
would set up a good long entry point for this once
universally-loved, now universally-hated stock.
This item by Enis Taner was originally published on
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