apple inc AAPL Shares closed up 2.84% on Thursday, in line with the broader market performance on which investors and traders were focused optimistic tech earnings that overshadows any worries about weakness in the economy.
The stock is up over 34% year-to-date. This compares to a nearly 17% gain in the Nasdaq Composite over the same period. With the iPhone manufacturer scheduled to release its quarterly earnings next week, here’s a look at the key trading levels being considered by the options market:
1. Resistance: Options expire on May 5thth indicate the maximum accumulation of open interest under out-of-the-money call strikes at the $170 level. This is interesting as shares of Apple ended Thursday’s session at $168.41. If open interest rate levels rise on this strike next week while the stock remains closer to that level, there’s a good chance it won’t break $170 in the short-term. The next level of resistance is priced in at $175.
2. Support: On the other hand, options data shows that the $165 put strike receives a decent accumulation of open interest. If the numbers continue to rise, it would indicate that traders are becoming increasingly confident that the level will hold as support next week.
However, with the earnings release scheduled for May 4th, volatility is likely to increase and any large divergence in earnings from estimates could result in significant stock price movements on either side. Additionally, open interest numbers sometimes shift at the beginning of the week or after a major news break. Therefore, it is worth watching the options strikes, both calls and puts, which achieve the maximum accumulation of open interest. It would be a prudent strategy to avoid uncovered or unhedged positions in options this week.
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