Volatility so high, Apple Options up on falling stocks

Apple stock lately is an intriguing subject of discussion as after months of positivity shares have been faltering. Today we have news that volatility is high meaning options prices for Apple stock are up as shares continue to fall.

As the Apple share slide goes on investors are becoming edgy so that options prices are at their highest level now since last fall, just after the death of Steve Jobs. Implied volatility is usually higher as options prices increase and the term is used as “a measure of the market’s expectations for future stock swings based on options prices,” according to the WSJ. These stock swing expectations over the next month are described as 30-day implied volatility and this has risen by nearly 20% in the last two weeks according to date from LiveVol Inc.

In that same time Apple shares have fallen over 10% and yesterday (Monday) shares fell for the ninth time over 10 days, down 0.2% ($1.28) to $571.70. TradeKing senior options analyst Brian Overby spoke of investor anxiety explaining, “People get a little bit more nervous as the stock goes down, and so people are more worried about downside in Apple than they have been.” Overby went on to say that it was no surprise to see volatility this high considering that people are also looking to options for speculation as well as protection.

Many known traders are not predicting that Apple shares will soon rebound and in yesterday’s option trading, the largest was by an investor forecasting that shares will stay low into the summer. This trader was betting on the chances that stock would carry on trading at less than $580 through July 21.

What are your thoughts on Apple shares continuing to slide and the fact that options prices are high? Let us know with your comments.

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