The U.S. stock market has been facing challenges, with bond yields reaching new highs and disappointing earnings from major companies like Alphabet and Tesla. In this context, Apple stands out as a beacon of strength, being the only stock among the top ten in the S&P 500 close to its all-time high. Since late June, Apple shares have surged 20%, nearing a record just set over a week ago.
As Apple prepares to report earnings, options traders are showing strong interest, with $590 million in options premium traded on Friday, of which $442 million was linked to calls. This indicates a bullish sentiment, as traders purchased nearly 560,000 calls compared to 332,000 puts.
Notably, options pricing suggests a potential 4% move for Apple post-earnings, significantly higher than the average 1% swing seen over the past year. Analysts, including Nigam Arora, believe that Apple could play a stabilizing role in the market this week, especially as it is perceived as a defensive stock amidst heavy AI capital expenditures by its competitors.
The largest trade on Friday involved a $2.6 million position in 280-strike calls, indicating confidence in Apple's performance. The most significant open interest for options expiring this Friday is at the $320 strike, suggesting that investors expect the stock to hold above last week's lows, even if earnings do not trigger a rally