Tag: S&P 500 CBOE Unusual Options Activity Andrew Keene Equity Options
The pullback, since hitting $700, has lasted 39 trading days, more than any other pullback of late. The length of time the bears have been in control is unusual by AAPL standards, but also the range is unusual. The average range of this pullback is $15.67. Traders on Friday saw a massive range. As indicated before, AAPL had a range (high to low) of $24.25 or 4.59%. This is outside 1.5 standard deviations of the mean. Meaning that 83.6% of the observations were below this. In addition to this, the volume on Friday was massive. 43 million shares traded hands. The last time AAPL traded that much volume was on 3/13/12’s ‘gap and go.’ While these are interesting quantitative observations, qualitative observations are important too in stock analysis.
Given the unusual nature of Friday’s action, a short-term bottom could have been built. Volume may indicate a ‘wash out’ and the price action could be confirming given the massive hanging man. The other side of this trade is clear however. AAPL has dominated for a long time now. They were formerly the underdog, but now they are the firm to beat.
A massive trend line connecting AAPL’s bottom to the flash crash low and finally touching the 6/20/11 bottom, sits only $50 away from Friday’s low. Given the $20 at the money weekly straddle, this is not out of the question in the short term if the market takes a dive.
In related news AAPL is expected to produce a slick flat screen LCD or LED HDTV by next year. Perhaps one can expect it to look similar to the new iMac given that skinny design.
Feel free to e-mail any comments, feedback, suggestions, or general inquiries to…
Trade: Buying the $DAL Jan 2014 20 Calls for $.30
Risk: $30 per 1 lot
Notes: Good risk vs reward and Paper bought 18,531 $DAL Jan 2014 20 Calls for $.30
UPDATE 9.21.2012 These Calls are now trading $.27, but this is a long term lottery ticket, not a short term one.
1. The market will continue higher throughout the rest of the year.
2. Obama will win the Presidency.
3. The government will print money till the cows come home, driving up the price of gold with inflation bound to happen.
The stock market is being bought on any dip and I think it will continue until next year. I expect a huge sell off in 2013. The word “recession” is thrown around way too often, there is a slowdown in China, and troubles in Europe are still looming overhead. However, now is not the time to get short, price action and price momentum is too strong to play against. There has been a slew of upside call buyers in 2014 in gold and silver miners indicating these stock will continue to go up as long as QE infinity goes on. You can’t fight the Fed.. .