then AAPL is about to make a massive move higher.
In early April 2013, IV soared higher. A couple of weeks later, AAPL dropped from $420 to $380.
In late July-early August 2013, IV plunged lower. A couple of weeks later, AAPL rose from $450 to $500 (Icahn tweet).
In November 2013, IV once again plunged lower. A couple of weeks later, AAPL soared from $520 to $575.
IV is now LOWER than ALL the other times cited above. Also, it's been lower for a longer period of time.
Judging solely on this basis, AAPL is about to make a $50+ move higher and it will happen any day now.
I don't know WHY AAPL is about to move massively higher or what will be the catalyst. However, the last 3 times IV was this low, the stock moved much higher to the upside. The fact that IV is lower now than at any time in the past year, something BIG is about to happen.
The problem with your theory as europicnic points out is the exact timing. The only logical reason AAPL would move 50 points higher is if Cook announced a buyback increase or a sizable dividend increase. As Cook said, AAPL would provide more info between March and April. So when exactly does the move happen? In late March? Early April? Late April around earnings? If one is buying weekly calls, then one is gambling. I think your ideas have general merit but not predictive value. Hard to time a stock with so many moving parts as AAPL.
6 days later this guy pumping with a new thread. Stock hasn't moved up a dime. You would have lost 100% of your investment with your flawed theory. Now you're stating a move of 50 points in 5 days again. LOL One week this might actually happen but not before you blew up your account 4 times.
I hope you are right in your analysis and AAPL moves up , we are long overdue for a nice runup.
I belive the catalyst will be a new product lunch scheduled in mid March (aka iWatch)
Sentiment: Strong Buy
Man.....the intuition is RIGHT, but WRONG at the same time. Implied Volatility is the "expected" volatility for options. This is how the PREMIUM in the option is priced. That being said, a LOW IV typically means the stock is not "expected" to move a a bunch.
Your wrong when u correlate a high IV to a drop in price, or a low IV to a rise in price.
Does that make sense?
See?! IV Spiked VOLATILITY spike 5% today, but look at the SHARE price. There is correlation AT ALL. Volatility increases when there is ANTICIPATION of a stock movement.
Could even be to the downside...-10% isnt out of the question.
Remember I play the market, I am LONG APPLE, but I dont think its going to move up JUST BECAUSE VOLATILITY is low.
Sentiment: Strong Buy
Forget about theory for a minute.
In the past year, when volatility was very low, the stock price went up $50 or higher almost immediately. When volatility was very high, the stock price plummeted.
THIS HAS BEEN TRUE EVERY SINGLE TIME SINCE VXAPL STARTED TRADING. I checked it myself going all the way back to 2011.
AAPL implied volatility is the LOWEST IT HAS EVER BEEN.
Nothing here makes sense. This is the world of AAPL. This is what has been happening. I predict AAPL will go up $50+ in the next couple of weeks if this pattern holds true which it has every single time it's happened.
Great post. I always have the vxapl on 1 of my screens and it is near all time lows (google finance has 19.55 as low since its inception in 2011). I'm an option seller and to have $3 of premium at the closest strike on Tues is unheard of, and not really worth it.
This is a good opportunity to buy may or july calls cheap because you know the volatility will spike as earnings approach.
I see the same pattern as you, but as others have mentioned I don't see the catalyst to make it pop. But since puts are so cheap it's worth take a chance.
Other strategies such as straddles or strangles will work well because you know volatility will rise.
new policy is set in april…..that is what happens in april….but as far as a massive move…..i don't see it
…they will raise the divy by 15% or $1.80 to 2 buck a year…..perhaps add to buy back….or not……then possible split…most likely not…….then earnings of course…..
Just found this written today by Schaeffer Research:
"Fire Sale on Apple Inc. (AAPL) Options"
"Bargain hunters may be headed to the Apple Inc. (NASDAQ:AAPL) option pits, as premiums are at a historical low. In today's trading, Apple's 30-day at-the-money implied volatility dropped to 18.75%, its lowest point in over a year."