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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


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Thu, 10/25/2012 - 15:22 | Link to Comment earleflorida
earleflorida's picture

miss on the top but beat on the bottom?

Thu, 10/25/2012 - 15:25 | Link to Comment fonzannoon
fonzannoon's picture

I wonder if BAC showed them how to use DVA

Thu, 10/25/2012 - 15:45 | Link to Comment 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 | Link to Comment 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 | Link to Comment gmak
gmak's picture

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

Thu, 10/25/2012 - 15:26 | Link to Comment news printer
Thu, 10/25/2012 - 15:26 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment LongSoupLine
LongSoupLine's picture

just your everyday market discovery at work....

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

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

Thu, 10/25/2012 - 15:40 | Link to Comment virgilcaine
virgilcaine's picture

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

Thu, 10/25/2012 - 15:40 | Link to Comment 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 | Link to Comment 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 | Link to Comment RmcAZ
RmcAZ's picture

AAPL $606.66

Thu, 10/25/2012 - 15:40 | Link to Comment insanelysane
insanelysane's picture

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

Thu, 10/25/2012 - 16:02 | Link to Comment 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 | Link to Comment 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 | Link to Comment virgilcaine
Thu, 10/25/2012 - 16:11 | Link to Comment 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 all.


Thu, 10/25/2012 - 16:31 | Link to Comment 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 | Link to Comment earleflorida
earleflorida's picture

Duffman's secret shame? Dyslexia!

Thu, 10/25/2012 - 19:42 | Link to Comment 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 | Link to Comment barthezz
barthezz's picture

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

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