soup: >He also said, somewhat amazed, *that he had never seen an open interest this large.<
Marc Newman: >Hmm, so this could help keep the price in check by Friday, even if we had an amazing quarterly report? Am I reading this right?<
No, it means that a large number of short-term players betting big-time, that AAPL will bolt upwards as a result of tomorrow's earning announcements.
IMO, this is not a contrarian indicator. Unlike short sellers, holders of these options do not have to cover (sell stock to prevent greater losses) and push the stock lower.
I believe significant, but as yet undisclosed, broker/hedge fund interest to be active here.
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In any case, my purchase price was nominal (I'm up 50% now.)
If AAPL heads up near 30, I'll near-quadruple my investment ($1 3/8 to $5.)
If it just makes its numbers ands holds $26-27, I'll probably get out even.
If it disappoints mildly, I'll likely lose 50%.
If it disappoints big-time, I can take the loss.
soup |
