Ever since Apple Inc.’s (AAPL) latest earnings release on October 28th, the stock has been a veritable snooze-fest. Here are a few stats to back it up. Over the past month, the beloved tech behemoth has traded in a super tight $18 range between $530 and $512. That’s a paltry 3.4% range, folks. Not just for one day or one week mind you. But for an entire month!
Needless to say, the utter lack of movement has driven a number of volatility indicators into the abyss. Take the Average True Range (ATR) for instance. At $6.92 AAPL is moving the smallest amount per day in two years. We could also consider the Bollinger Band study. The volatility vacation has squeezed the bands together to their narrowest width in some three years.
So, has volatility been banished from AAPL, never to return?
Analyze the long-term behavior of volatility and you’ll see it’s cyclical. Stocks alternate between periods of volatility compression and volatility expansion. The current regime of quietness that has descended on Apple will prove fleeting. I suspect a breakout is looming in the coming weeks.
Not surprisingly, the ebb in stock volatility has driven implied volatility in the options realm to new lows for the year. As shown in the accompanying chart of the CBOE Apple VIX Index ($VXAPL), AAPL options are boasting an extremely depressed volatility of 21.5%.
Aside from the lack of movement in AAPL stock the other factor contributing to the cheapness of options in AAPL is the calendar. The next six-week stretch isn’t exactly notorious for fireworks. With Thanksgiving, Christmas, and the New Year rolling around we have a number of market closings and options are becoming cheaper in anticipation.
Tack on the fact that Apple’s next earnings release comes in January and long volatility plays in AAPL options start to look pretty intriguing in the coming weeks. This is likely a topic we’ll explore in my upcoming trading labs.
- Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.