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Apple Investor Anxiety At Its Highest In 18 Months

Tyler Durden's picture


Just over a month ago - before AAPL started to fall apart - we noted the extreme levels of complacency priced into AAPL options. Heading into tonight's earnings, it seems investors are as extremely concerned as they were complacent just a few weeks ago. AAPL option prices are implying investors expect significant downside possibilities - the most concerned they have been in 18 months. Whether this is ammunition for a squeeze higher or is just the over-crowded long hedgies covering into earnings on hope - looking to reduce into strength - we will see in a few hours (but for now - the constant fading of VWAP reversions suggests the latter).


The Options-implied skewness expectation of the forward distribution or returns for AAPL - or in English - the lower on the chart, the more investors are expecting a stock-drop.


and day after day we are seeing pullbacks to VWAP (the red-lines and the horizontal lines) being faded on sizable volume - suggesting market-maker algos digesting institutional block sell orders...

Evidently, this is not short-sellers - this is longs exiting - and the skew in options suggests those that didn't sell, covered up somewhat...


Charts: Bloomberg

Your rating: None

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Thu, 10/25/2012 - 15:22 | 2919379 earleflorida
earleflorida's picture

miss on the top but beat on the bottom?

Thu, 10/25/2012 - 15:25 | 2919393 fonzannoon
fonzannoon's picture

I wonder if BAC showed them how to use DVA

Thu, 10/25/2012 - 15:45 | 2919424 Dr. Engali
Dr. Engali's picture

"I wonder if BAC showed them how to use DVA".......


While using OPM to DCA into a UIT at their local BD.


Thu, 10/25/2012 - 15:27 | 2919388 Cognitive Dissonance
Cognitive Dissonance's picture

I was very surprised to read that Apple just extended the time an iPad 3.0 buyer could return their new iPad from 14 days to 30 days in order to allow those who recently bought the 3.0 version to "upgrade" to the just released 4.0

Very un-Apple like. In the past this option was never offered. Sign of problems ahead?

<Disclosure......I own and love my Apple products.>

Thu, 10/25/2012 - 15:48 | 2919448 gmak
gmak's picture

Or a sign of recognition that the customer is king, and not the company.

Thu, 10/25/2012 - 15:26 | 2919395 news printer
Thu, 10/25/2012 - 15:26 | 2919396 amadeusb4
amadeusb4's picture

Past performance is no indication of future results, but you would have gotten a good return if you went long AAPL at each of the previous red arrows.

Thu, 10/25/2012 - 15:26 | 2919397 Dr. Engali
Dr. Engali's picture

Hedging that heavily when Apple is already down 14% from it's high tells me to take the opposite side of that trade for a short term pop,

Thu, 10/25/2012 - 15:27 | 2919398 tahoebumsmith
tahoebumsmith's picture

I would have anxiety too if I had all my apples in one basket..Apple Sauce BITCHEZ


Thu, 10/25/2012 - 15:27 | 2919399 bigdumbnugly
bigdumbnugly's picture

'apple anxiety'

i sense a coming wave of new medical diagnoses on the near horizon.

disability claims to rise smartly over the next few months...

Thu, 10/25/2012 - 15:30 | 2919405 kaa1016
kaa1016's picture

It looks like it might be time to go long for a quick move up to $652. I don't think I'll play this overnight. If it hits $652, I'm going short. Still 30 minutes left, we'll see...

Thu, 10/25/2012 - 15:31 | 2919406 LongSoupLine
LongSoupLine's picture

just your everyday market discovery at work....

Thu, 10/25/2012 - 15:33 | 2919408 Frozen IcQb
Frozen IcQb's picture

AAPL is still in the $ three digits.. why worry?

Thu, 10/25/2012 - 15:40 | 2919416 virgilcaine
virgilcaine's picture

AAPL is the Hedge Fund... aka "Roach Motel".. 800 roaches and growing.

Thu, 10/25/2012 - 15:40 | 2919418 Bam_Man
Bam_Man's picture

The stock is now trading at more than a 10% discount to the overall market on a forward P/E basis.

As much as I love ZH and embrace the contrarian mindset, I think anyone expecting the stock to correct much further - without squeezing the hell out of the shorts first - is setting themselves up for a beating.

Thu, 10/25/2012 - 16:01 | 2919489 css1971
css1971's picture

So... Earnings...

If everyone who wants an apple has an apple, what is the marginal utility of yet another apple?

Thu, 10/25/2012 - 15:40 | 2919419 RmcAZ
RmcAZ's picture

AAPL $606.66

Thu, 10/25/2012 - 15:40 | 2919420 insanelysane
insanelysane's picture

Apple just took Pandora off the market with the announcement of Apple radio.

Thu, 10/25/2012 - 16:02 | 2919495 vix is for kids
vix is for kids's picture

Portable, wireless iTransistor radios.  What will they think of next?

Thu, 10/25/2012 - 15:40 | 2919421 slaughterer
slaughterer's picture

Remember the "Apple Bonkers" from the movie "The Yellow Submarine"?  That is the image for AAPL in AH after earnings release.  

Thu, 10/25/2012 - 15:48 | 2919447 virgilcaine
Thu, 10/25/2012 - 16:11 | 2919532 The Count
The Count's picture

You want to short something, short Microsoft. That stock has been going nowhere for years now. And the decrepid OS Windows, now in it's 8th incarnation, proves that they have nothing up their sleves...at all.


Thu, 10/25/2012 - 16:31 | 2919599 edifice
edifice's picture

Windows 8 is horrid... We received the beta in at work, and it's unusable on anything other than a tablet.

Thu, 10/25/2012 - 17:00 | 2919767 earleflorida
earleflorida's picture

Duffman's secret shame? Dyslexia!

Thu, 10/25/2012 - 19:42 | 2920181 Sokhmate
Sokhmate's picture

AAPL investors can make the excess fruits they hold into Dicken's Cider, mix with some brandy, and savor it.

Thu, 10/25/2012 - 23:42 | 2920614 barthezz
barthezz's picture

All, what is the bloomie function to chart the option skew? thanks

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