Apple Stock Soars To Record Highs As Options Traders Grab Calls

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Apple Stock Soars To Record Highs As Options Traders Grab Calls
<a href="https://pixabay.com/users/ElisaRiva/">ElisaRiva</a> / Pixabay

News that Apple was investing in some data hubs in Europe helped boost shares

Apple stock broke $130 a share today, rising as much as 2.06% to as high as $132.16 per share, setting new records as news of a major investment from the company broke today. Shares of Apple have been climbing so quickly that many analysts who have the equivalent of a Buy rating or better on Apple are struggling to keep their price targets from falling underwater.

The average price target for Apple is $134.12, according to Schaeffer’s, which pooled the ratings of 30 firms following Apple and found not a single Sell rating.

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Apple invests in data hubs

The company reported today that Apple plans to spend $1.9 billion (€1.7 billion) on two data centers in Denmark and Ireland. Both data centers run on renewable energy, and Apple will run the iTunes Store, Siri, Apple Maps, the App Store and iMessage on them.

CEO Tim Cook said the investment is their biggest project in Europe so far. He added that the two data centers would create “hundreds” of new jobs in the regions where they will be located. The data centers will each be 166,000 square meters and are expected to be up and running in 2017.

Apple stock rockets upward

Meanwhile Apple shares continue climbing higher and higher today, and the company’s market capitalization is now closing in on $757 billion. The stock has been one of the S&P 500’s best performers so far this year, climbing approximately 18%.

Apple has also remained the most popular position among hedge funds for the second quarter in a row, according to Goldman Sachs’ latest Hedge Fund Trend Monitor. Indeed, it’s easy to see why, as in less than two weeks, Apple has added over $50 billion to its already-massive market cap.

Call options on Apple rising

As Apple stock climbs, options traders are getting busy grabbing up calls, reports Karee Venema of Schaeffer’s Investment Research. She said options traders were buying the calls at “a rate of 1.5 times the average intraday pace.”

According to Venema, the most active calls are the weekly Feb. 27 130 and 131 strike calls. She detected some significant buy-to-open activity in those calls. Traders who are buying these options are expecting Apple to end the week higher than the strike prices.

“Delta on the lower-strike call is docked at 0.59, and 0.47 at the higher-strike call, suggesting a 59% and 47% chance, respectively, of an in-the-money finish,” she added.

Apple calls are beating puts

Venema also reports that short-term speculators have been clearly preferring calls rather than puts, as the Schaeffer’s put / call open interest ratio for Apple is 0.62. She states that this indicates that call open interest is greater than put open interest in option contracts that expire at some point within the next three months. However, she also states that this ranking is “lower than 86% of similar readings taken in the past year.”

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