Apple Inc. (AAPL) Silicon Valley tech giant that creates every “I” related tech product. The popular creator and distributor of computers, tablets, phones, and media has been boring the past two years without a new product launch. The tech company and its CEO Tim Cook, have been criticized for not continuing with the innovation and creativity found in the Steve Jobs era. Over the weekend Apple made the announcement that they had big news to announce Monday at WWDC. The hype and excitement around the potential for a new and innovative product has implied volatility juiced up.
Implied volatility surrounding announcements makes options pop in price value. We see implied volatility get inflated whenever bio tech companies report drug announcements, earnings announcements, and new product announcements. Implied volatility is inflated due to the uncertainty surrounding the news of the announcement. However after the news is announced implied volatility gets crushed as investors have processed the information and how it will affect the company and the stock price.
Awaiting Apple’s announcement, the stock is trading at $633.00 and was up about $1.27 pre-market. Apple has been trading in a fifty two week range between $388.87-644.17. Apple is trading above a very bullish cloud, with a slanted bullish future cloud. I believe Apple’s bullish chart is setting up for a long position. Remember getting in ahead of the announcement will mean that an options buyer will pay more in premium because of the pending announcement. After the announcement implied volatility will get crushed, lowering the value of the option.