Stocks have been under pressure for two months as rising bond yields weighed on equities, and recent earnings from big names like Alphabet and Tesla landed with a thud. But last Friday, something unusual happened in one of the most watched stocks on the planet.
Traders placed a massive wave of bets on Apple shares ahead of its earnings report this week.
Most of that money leaned heavily toward the upside. About $442 million went into call options, which are bullish bets that the stock price will rise. For context, traders bought almost 560,000 call contracts on Friday compared with just 332,00 put contracts.
The biggest single trade was a blockbuster: a $2.6 million position in call options with a $280 strike price, set to expire in mid-August. Whoever placed that bet is expecting Apple to blow past that level in the coming weeks.
Apple has quietly become the only stock among the ten largest in the S&P 500 that is trading near its all-time high. It hit $335 just over a week ago, and after a rough stretch earlier this summer, it has shot up 20% from its late-June low.
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So why the sudden love from options traders? A big part of it comes down to what Apple is *not* spending on.
As Nigam Arora, founder of The Arora Report, put it: "Investors are viewing Apple as a defensive stock because, unlike several of its peers, it isn't spending hundreds of billions on AI capex."
That matters because when the broader market is shaky, investors tend to look for companies with strong cash flow, loyal customers, and predictable earnings. Apple ticks all those boxes. And the options market is betting that the company's upcoming report will confirm that story.
Right now, the pricing of options implies that Apple's stock will move about 4% in either direction after earnings. That is a big number compared with history. Over the past year, the actual average move after Apple earnings has been just 1%.
Looking at open interest - the total number of outstanding option contracts - the $320 strike price is the most popular for options expiring the Friday after earnings. There are 13,000 call contracts at that level versus 5,000 put contracts. That is a heavy concentration of bullish bets right at a price Apple has already traded above.
The 300-strike put was the most active option contract for this Friday's expiration, with 7,500 trades worth just $374,000 in total premium. Next was the 340-strike call, where 5,000 contracts traded for $2.3 million. That call cost $4.25 at Friday's close, meaning investors need Apple shares to climb 3.4% this week, surpassing its all-time high of $335.
All of this noise is about one company, but the ripple could hit the whole market. As Arora said: "I think the probability is fairly high that Apple could help stabilize the market this week." If Apple delivers a strong report on Thursday, the stock's surge could lift the broader market out of its two-month slump. A disappointing report could do the opposite, especially with so much optimism already priced into options.
When a stock that traded sideways for seven months suddenly sees $590 million in options activity, something is shifting. The 4% swing the market is pricing in would move roughly $120 billion in market value in a single day for a $3 trillion company. The options market has placed its bet - now we wait to see who is right.
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