To The Moon

As Apple prepares to release its latest quarterly earnings after the US market close on Thursday, the options market is sending an unusual bullish signal. Against a backdrop of two months of market-wide consolidation in US stocks, record-high Treasury yields, and disappointing earnings from both Google and Tesla, Apple stands out as the only stock among the top ten S&P 500 components that is trading near its all-time high.

Large capital in the options market is actively buying in-the-money call options, while speculative funds are betting the stock will break through its record high before Friday. Meanwhile, the implied post-earnings volatility priced into options is nearly 4%—a figure significantly above the historical average of about 1% over the past year, according to Cboe LiveVol data, which flags this as an abnormally large implied move.

Apple's stock price barely moved in the first seven months of the year, but it has rallied roughly 20% from its late-June low, now sitting less than $2 below its all-time high set two weeks ago. As the broader market faces pressure, Apple is viewed as a rare safe haven, with high expectations for its ability to lift market sentiment.

Option Volume Tilts Heavily Bullish, with Large Capital Using Calls as a Stock Substitute

Last Friday, the option volume structure for Apple showed a clear dominance of bullish bets.

According to SpotGamma data, total option premium on Apple reached $590 million, with $442 million of that tied to call options. ThinkOrSwim data also showed that approximately 560,000 call option contracts were traded on Friday, compared to just 332,000 put options.

One notable large trade stood out: a trader opened a new position by buying Apple call options with a strike price of $280 and an expiration in mid-August, for a total premium of $2.6 million. The option's delta was near 1, meaning the position is effectively equivalent to holding the underlying stock, representing a strongly bullish bet using options as a stock substitute.

Strike Prices of $320 and $340 Reveal Two Themes: Defense and Breakout

Looking at the open interest distribution for options expiring this Friday, BarChart data shows the largest concentration of open interest at the $320 strike price, with approximately 13,000 call options and 5,000 put options. This structure suggests that even if the earnings report fails to trigger a significant rally, the market has high confidence that last week's lows will hold.

At the same time, the two most actively traded options expiring this Friday reflect both defensive and aggressive strategies.

The most active contract was the $300 strike put option, with 7,500 contracts traded and a total premium of about $374,000, representing a small hedge. The second most active contract was the $340 strike call option, with 5,000 contracts traded and a total premium of $2.3 million, according to SpotGamma data.

Based on Friday's closing price, the $340 call option was quoted at $4.25. The buyer would need Apple to rise approximately 3.4% this week, breaking through the $335 all-time high, to become profitable.

Analysts Suggest Apple Could Act as a 'Market Stabilizer' This Week

Nigam Arora, founder and writer of The Arora Report, stated, "I think there is a fairly high probability that Apple will help stabilize the market this week. Investors view Apple as a defensive stock because, compared to several peers, Apple has not spent hundreds of billions of dollars on artificial intelligence capital expenditures."

This perspective carries significant weight in the current market environment. US stocks have been in a consolidation phase for nearly two months, with Treasury yields climbing, while the earnings season for major tech stocks has been mixed. The market is in need of a new positive catalyst. Whether Apple's earnings report can fulfill this role, the options market has already placed its bet with real money, offering a clear directional preference.