The countdown to Apple‘s first earnings report of 2020 is officially on.
The tech giant is scheduled to report after the bell Tuesday, and one trader in the options market is betting that the results will be the key to Apple’s next leg higher and a quick remedy to the stock’s 3% drop in Monday’s sell-off.
Monday’s activity wasn’t just a one trader story, though. The spread in the action was tight, but bullish bets finished out the trading session slightly ahead of bearish bets.
“Apple is always one of the most active single-stock options in the marketplace, if not the most active, and we saw calls outpace puts by about 1½ to 1 today,” Optimize Advisors President Michael Khouw said Monday on “Fast Money.”
“Right now the options market is implying that Apple is going to move about 5.5% by the end of the week, and that is a bigger move than the 4.6% or so that it has averaged over the last eight quarters,” said Khouw, “I think some of what we saw in the marketplace today may explain that.”
As Khouw would point out, one of Monday’s biggest options trades in Apple targeted that 5.5% move to the upside almost exactly. A trader bought 1,500 of the Jan. 31 320/325-strike call spreads for $1.65, which translates to a bet of just under $250,000 that Apple will finish the week as high as $325 per share, or about 5.2% higher than Monday’s closing price.
Apple was up more than 2% in Tuesday’s session.