Trading Tools to Build Your Portfolio: Apple Inc. and Oracle Corporation Combine Forces

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It's a tech geek's dream marriage: this morning, Apple Inc. ( AAPL ) and Oracle Corporation ( ORCL ) announced that they would be partnering on the new OpenJDK project for Mac OS X. The partnership will make APPL's Java technology available to open source developers so they can access and contribute to the effort.


Yet AAPL was on the Street's radar even before this morning's announcement, as evidenced by the tech stock's many appearances in the Schaeffer's Most Active Options filter on Thursday.

Option players showed a preference for front-month puts yesterday, with AAPL's November 310 put seeing volume of 15,123 contracts traded. What's more, most of these puts crossed the tape at the ask price, indicating they were likely purchased. Open interest increased substantially overnight, confirming that fresh positions were added here.

But the bearish bets didn't stop there -- over 14,400 contracts were exchanged on the November 300 put -- the bulk of which also traded at the ask price. This strike saw the largest increase to open interest overnight, with over 5,000 contracts added. In fact, this strike is the undisputed home to peak put open interest for the soon-to-expire November series, with some 40,000 contracts in residence.

With AAPL trading around $315, there are two possibilities here: traders may have bought to open the November 300 put in the hopes that the shares sink beneath $300 by next Friday, or these 300-strike puts may have been purchased as protection by nervous shareholders.

In fact, Thursday's accelerated put activity is nothing new for AAPL, which currently boasts a 10-day International Securities Exchange (ISE) and Chicago Board Options Exchange ( CBOE ) put/call volume ratio of 0.76, which ranks above 94% of all other readings taken during the past year. This ratio reveals that speculators on the ISE and CBOE have seldom initiated bearish bets on AAPL at a faster pace.

Technically speaking, AAPL has been doing quite well lately, with the shares rallying to a series of higher highs and higher lows since the beginning of September. Throughout this time, AAPL's ascent has been underlined by strong support from its 20-day moving average, which has acted as a springboard higher for the shares, and is now located around $310.

Daily Chart of AAPL Since September 2010 With 20-Day Moving Average

For the past week, though, AAPL has been consolidating in the $315 to $320 neighborhood, as its 20-day trendline catches up to the shares. Meanwhile, with November options expiration just a week away, an unwinding of out-of-the-money puts could add an additional boost to the shares, fueling AAPL on its next leg higher.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: AAPL , CBOE , ORCL

Schaeffer's Investment Research

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Most Active by Volume

33,974,386
  • $17.98 ▲ 0.28%
20,763,901
  • $91.29 ▲ 2.06%
19,110,793
  • $7.26 ▼ 1.22%
18,528,869
    $8.33 unch
18,014,920
  • $4.19 ▼ 1.18%
16,448,919
  • $25.83 ▼ 0.19%
14,748,190
  • $7.60 ▼ 1.43%
14,144,383
  • $112.01 ▼ 0.47%
As of 12/24/2014, 02:12 PM


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