Apple Inc.(NASDAQ:AAPL) stock closed 2.36% higher Monday and has risen 5% over the last four trading sessions following a seven-week-long tech rout.
Just before the market close Monday afternoon, a few options traders made some large bets Apple stock will continue its upward trajectory over the coming weeks and months.
The call sweeps and blocks purchased within the last 2 minutes of trading Monday total more than $7.58 million and range in expiry date from April 30 to Sept. 17.
It will be interesting for retail traders to see if these calls are followed up with shorter dated calls on Tuesday.
The Apple Trades:At 3:34 p.m. Monday, a trader executed a call block of 800 Apple options with a $135 strike price expiring on Sept. 17. The trade represented a $524,000 bullish bet for which the trader paid $6.55 per option contract.
At 3:58 p.m., a trader executed a call sweep of 2,893 Apple options with a $120 strike price expiring on April 30. The trade represented a $2.27-million bullish bet for which the trader paid $7.83 per option contract.
At 3:58 p.m., a trader executed a call sweep of 1,080 Apple options with a $120 strike price expiring on April 30. The trade represented a $847,800 bullish bet for which the trader paid $7.85 per option contract.
At 3:59 p.m., a trader executed a call sweep of 1,743 Apple options with a $120 strike price expiring on April 30. The trade represented a $1.37-million bullish bet for which the trader paid $7.85 per option contract.
At 3:59 p.m., a trader executed a call sweep of 3,268 Apple options with a $120 strike price expiring on April 30. The trade represented a $2.57-million bullish bet for which the trader paid $7.85 per option contract.
Why It’s Important:When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.
These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.
When a block trade occurs, it indicates a hedge fund or institution has taken an options position.
A block trade always involves large sizing and is typically handled by a blockhouse outside of the open market. Because block trades don’t occur on the open market, the large size of the trades doesn’t create volatility in the stock being traded.
Like sweepers, blocktrades indicate “smart money” has entered a position.
AAPL Price Action:Shares of Apple closed up 2.36% at $125.90 Monday. The stock was trading 0.56% higher at $126.60 at last check Tuesday.