Volume Spike Investor

It is always said that options around the options expiration dates tend to act as a magnet to the closest strike price.  That appears to be the case today in Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG).  While it is easy to refute the notion in many very active stocks, the reason this matters in these high-priced stocks so much today is because many investors and traders have been using the stock options as the way to get exposure to bet for or against these two stocks.  If you can pay a fraction of the cost of buying 100 shares even though you may see your options expire worthless, this is still an attractive bet for many.

Google is at $570.30 as of 2:15 PM EST, yet we are not seeing any significant roll-outs into December-2009 or even Jan-2010 options

NOVEMBER 2009 CALLS
$TRIKE    Volume    Op.Int.
560.00    1,179    3,921
570.00    9,110    5,298
580.00    3,011    6,295

NOVEMBER 2009 PUTS
$TRIKE    Volume    Op.Int.
560.00    2,392    4,190
570.00    13,885    5,374
580.00    854    1,153

Apple is at $200.15 as of 2:15 PM EST… But unlike Google, there is a significant roll-out taking place into many of the same or out of the money strikes into December….

NOVEMBER 2009 CALLS
$TRIKE    Volume    Op.Int.
190.00    2,413    13,128
195.00    4,920    21,074
200.00    36,083    32,022
210.00    5,081    48,971

NOVEMBER 2009 PUTS
$TRIKE    Volume    Op.Int.
195.00    3,681    21,961
200.00    24,337    23,592
210.00    1,425    8,931

DECEMBER 2009 CALLS
$TRIKE    Volume    Op.Int.
190.00    1,403    5,502
195.00    2,758    9,172
200.00    9,101    25,129
210.00    8,367    35,741
220.00    5,411    21,227
230.00    1,030    28,445

DECEMBER 2009 PUTS
$TRIKE    Volume    Op.Int.
175.00    1,241    20,578
180.00    2,748    37,580
185.00    2,703    36,755
190.00    2,384    14,033
195.00    4,279    8,952
200.00    3,893    12,631
210.00    1,117    7,172

As a reminder, 10,000 contracts equals 1 million shares on a fully leveraged basis.   In Apple that is over 47,000 contracts in the NOV-2009 Calls and over 29,000 NOV-2009 Puts, which is 16,000 Calls or 1.6 million shares equivalent on a fully leveraged basis if you deduct the puts from the calls; AND that is over 27,000 contracts in the close Calls and 18,000 in the close Puts.  If these just acted to cancel each other out, then that would leave an extra 9,000 Call contracts or 900,000 shares on a fully leveraged basis.  With just over 10 million shares traded so far, that is fairly significant considering there is under two hours to the close.

JON C. OGG