Shares of consumer tech giant Apple (AAPL) have rebounded strongly in the past few weeks along with the overall market. One trader is betting on a move lower in the coming months.
That’s based on the December $170 put. With 123 days until expiration, 35,402 contracts traded compared to a prior open position of 890, for a 40-fold surge in volume on the trade. The buyer of the puts paid $11.33 to make the trade.
Shares recently traded around $168, making the option trade slightly in-the-money. Shares have a 52-week low of $129, set back in June, so a retest of that low could lead to big returns on this put option.
Apple shares are up 13 percent in the past year, compared to a slight drop in the S&P 500.
Action to take: Shares trade for about 27 times earnings, a slight premium to the market right now. Investors would be wise to wait for a drop in shares a bit lower before buying. A retest of the low would also push the dividend yield higher than the stock’s current 0.5 percent payout.
For traders, the options are a way to play a market downtrend, or a downtrend in big tech stocks, in the coming months. Given the current slowing economic data, traders may like the puts for a quick mid-double-digit gain.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.