2 FAANG Stocks With Red-Hot Options – Schaeffers Research (blog)

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Apple Inc. (NASDAQ:AAPL) stock is up 0.6% at $149.99, on pace for its best daily win streak since October, after Morgan Stanley lifted its price target to $182 from $177 — in uncharted territory for the blue-chip tech titan. Meanwhile, fellow FAANG stock Amazon.com, Inc. (NASDAQ:AMZN) is flirting with a 1% gain at $1,011.47, amid reports the e-commerce giant is stepping into the meal-prep delivery market — sending Blue Apron stock into a tailspin — and after upbeat analyst attention. Against this backdrop, both AAPL and AMZN stocks are seeing accelerated options activity today.

AAPL Stock Could Be Flashing ‘Buy’

Apple stock is set to notch its seventh straight win — on pace with the broader Nasdaq Composite, and marking its longest stretch of consecutive daily gains since late October. Further, the stock is set to topple its 50-day moving average for the first time since the massive tech swoon in early June — a technical feat that’s been a notable “buy” signal recently. Meanwhile, Apple call options are trading at twice the average intraday clip, with roughly 272,000 contracts exchanged so far, compared to fewer than 95,000 puts.

Much of the action appears attributable to eleventh-hour options bulls buying to open July 150 and 155 calls, which expire at Friday’s closing bell. These options are the two most active so far today, and will move into the money if AAPL stock tops the strikes by week’s end. Apple shares peaked at $150.90 earlier today, and haven’t traded north of $155 since early June, before the tech-sector pullback.

Today’s affinity for long calls represents a change of pace for Apple options traders of late. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock’s 10-day put/call volume ratio of 0.59 is in the 76th percentile of its annual range. So, while AAPL calls have been more popular than puts on an absolute basis, options buyers have been picking up AAPL puts over calls at a faster-than-usual clip during the past two weeks.

Analyst: Amazon Could Rival Apple’s Size

UBS analysts raised their price target on Amazon stock to $1,200, and said the stock could skyrocket 60% to $1,600 in the next year, and rival Apple’s size. AMZN stock has already soared nearly 38% in the past year, and is once again encroaching on its record high of $1,017, tagged on June 19.

Off the charts, Amazon has flexed some serious fundamental muscle recently. The company’s plans to purchase Whole Foods sent shivers down the collective spine of grocery stores, and plans to dip its toes into the fashion arena weighed on department-store stocks like Macy’s.

Today, AMZN calls are slightly more popular than usual, with roughly 43,000 traded so far, compared to 32,000 puts. As with Apple, Amazon options traders are seemingly placing bullish bets in the soon-to-expire July series, with apparent buy-to-open action at the July 1,000, 1,010, 1,015, and 1,020 calls — the four most active options in afternoon trading. As such, the speculators expect Amazon stock to extend its journey north of the millennium marker over the next few sessions.

Amazon’s near-term options traders are actually more put-heavy than usual right now. The stock’s Schaeffer’s put/call open interest ratio (SOIR) of 1.18 is higher than 76% of all others from the past 12 months. The July 1,000 strike is home to peak put open interest in the front-month series, with more than 5,000 contracts outstanding. In the August series, peak put open interest is at the out-of-the-money 900 strike, home to nearly 3,000 contracts. It’s possible some of the recent buyers of these puts may have been AMZN shareholders seeking an options hedge in the event of more tech-sector headwinds.

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