Even for a stock as volatile as Apple, Wednesday was a weird one
According to Terry Gregory, who keeps track of such things at AAPLInvestors.net, Apple (AAPL) was set to register its 8th highest close of all time -- $408.25 -- Wednesday before the selling started. By 4 p.m., it had fallen to $402.64 a share, its 19th highest close.
Gregory's one-word comment on Investor Village's AAPL Sanity board: "Ugh."
Subscribers to the theory of maximum pain -- which holds that stocks whose options are traded on a weekly basis tend to close each Friday at a price that rewards institutions selling puts and calls and penalizes investors buying them -- will note that in Wednesday's action, Apple's share price fell $5.61 closer to max pain, which currently stands at $400.
Given that there are 929.41 million shares of Apple out there, that $5.61 drop shaved more than $5.2 billion off the company's market cap.
Strike prices range from $335 to $400 as traders scramble to deal with a market in free fall
A hedge-fund trader hoping to make some quick money in Apple (AAPL) weekly options would be hard-pressed to make sense of the chart at right, a snapshot of thinkorswim.com's AAPL options board taken at 10:30 a.m. Monday morning.
The bottom two graphs show open interest in Apple weekly calls (left) and puts (right) as of MOREPhilip Elmer-DeWitt - Aug 8, 2011 11:35 AM ET
Resistance was high, but the stock still managed to record a 34-year high
Apple (AAPL) closed at $398.50, up
$5.20 (1.32%) for the day
$83.18 (26.4%) since June 20
$79.94 (23.5%) for the year and
$139.22 (53.7%) year over year.
Barrons' Tiernan Ray notes that the stock hit $400 twice during the day, once shortly before 1:00 p.m. EDT and then again at 2:25.
Judging from the open interest in Apple weekly calls and puts, Max Pain MOREPhilip Elmer-DeWitt - Jul 25, 2011 4:35 PM ET
In 52 weeks, Apple shares closed within $1 of the so-called Max Pain range 39 times
To ordinary investors, the trading in Apple (AAPL) shares last week must have looked a little crazy. On Monday, when the Dow was up, the stock fell, only to shoot up $9.98 (3.17%) the next day. On Thursday, when the Dow was down, the stock was up $8.62 (2.67%). If Apple could have held on MOREPhilip Elmer-DeWitt - Jun 25, 2011 8:12 AM ET
With the Dow up and no negative news on the wire, the stock fell off a cliff Thursday
Thursday was another one of those bizarre trading days for Apple (AAPL). The stock opened higher, flirted with some prices north of $328 in the morning and made it through the early afternoon without suffering much damage, despite the turmoil in Greece.
Then, at about 1:50 p.m., the volume jumped and the stock fell MOREPhilip Elmer-DeWitt - Jun 16, 2011 3:43 PM ET
A case study in how the options market reacts to breaking news
We've written a lot lately about how traders buying and selling options seem to be driving Apple's (AAPL) share price (see here, here and here.) So we thought it might be instructive to look at what happened on a day when Apple's share price took over and drove the options market -- specifically, the so-called Max Pain price point MOREPhilip Elmer-DeWitt - May 23, 2011 9:00 AM ET
There's something very fishy about the weekly options market. Is it time to reel in the bad guys?
It was 3:48 p.m. on Friday April 29 and traders who had purchased Apple (AAPL) April 29 $350 "calls" -- options that gave them the right to buy Apple shares in blocks of 100 for $350 per share -- were sitting pretty. The stock was trading around $353.50 and those calls were worth MOREPhilip Elmer-DeWitt - May 12, 2011 1:00 PM ET
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