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04/16/14




80% Probability Range $xxx-$xxx
96% Probability Range $xxx-$xxx                                                                                                                                                                                                     My Take on 96%: $xxx-$xxx

 

 

[Added Amazon tab to help support the site] 

12/14/13 – No probabilities as the monthly is becoming less foreshadowing.

 

10/19/13 – See 08/19/13 note.

 

09/20/13 – That $500 strike will give you a good buying opportunity going into the Christmas season. Monthly expiry is prior to earnings. Between the $500 strike and rumors of how disastrous earnings are going to be due to x, y and z, this pressure will give you a good entry position (or 1/x on expiry and 1/x after ER).

 

08/19/13 – Not going to give a probability range until the week of expiration. With 5 consecutive weekly option series, the range can change drastically.

 

08/13/13 – With today’s news, in no way are options going to influence the stock.

 

07/21/13 - Probabilities not tracked due to event/earnings.  

 

07/15/13 – Added “ALT PAIN” page.  

 

05/19/13 – $500 calls are at 68K making the scale too difficult to read lower strikes. I moved the scale down and only noted $500 call/put OI.

 

04/21/13 – Probabilities not tracked due to earnings event.  

 

04/18/13 – No reason to show lower than $400 puts. There isn’t anything down there. AAPL is the only stock that forgets to build puts.  

 

04/17/13 – Volume or sell volume way too big for options to help very much.  

 

04/14/13 – $400 is this the highest put OI along with $500 calls. I used $430 for the 80% range all month so am sticking with it. Just to note, it’s not the actual highest OI.

 

03/13/13 – See note from 03/05/13.  

 

03/07/13 – Like an Octopus: devouring another sea creature. Calls are the Octopi with puts & Apple shareholders being, well, you know.  

 

03/05/13 (pm) $400 will become the highest put OI next week.  

 

01/20/13 – Due to event (Apple’s earnings), probabilities are not tracked.

 

01/14/13 – As you can see, negative rumors tend to be perfectly timed. The options market is pointing towards a close near $500. Let’s say $500-$520. History has shown, once we get thru this ex-LEAPS expiry, the stock will move higher as selling pressure is relieved. (graph now zoomed in for better visual on ATM)

 

01/01/13 – I will bring back the probabilities starting next week.

 

 

12/09/12 – Due to the fiscal cliff and tax selling, I would not recommend selling weekly credit spreads. Apple has become excessively volatile as if events are taking place. Using OI becomes less reliable when events or excessive volatility appear. Until the fiscal cliff is resolved or the new year comes, I will not be tracking probabilities. I will still show the ranges, but they do not carry any probabilities.

 

 

 

I show 2 probability ranges, 80% and 98%. My take is on the right hand side. If it’s in green I think it will hold, if red I wouldn’t make a risk trade on that strike. This is just personal opinion to give people my thoughts. The 80% probability range uses the highest OI and the 98% goes 1 strike OTM or more. *Note: I always recommend using the 98% range only for risk trades. 

 

General - This is an OI/Max Pain graph. It uses open interest (OI) to determine a max pain range. The arrow on the put side is for the “no lower than” price, the arrow on the calls is the “no higher than” price. Using an OI/Max Pain strategy helps to determine where AAPL will NOT be. An OI graph has many uses; use it to sell options, buy/sell points or just plain ease your mind. Using an exact Max Pain strike is not all that accurate, using a range is. This is the reason you will not find an exact strike figure on this site.

(Historical Posts on “Misc” page)

  • buckterry

    What is probability of red Friday (8/9) green Monday (8/12) going into August monthly OpEx week?

  • dansan

    Travis……has the chart for June 22nd been updated? Could you provide the most recent OI? Thanks for all you do. Dan

    • http://www.aaplpain.com Travis Lewis

      It’s not updated just because there is no change. Looks the same. I’ll update it with tonights info.

  • Roger

    Travis,

    If Aaple would shares per their buyback program at every monthly and/or Leap opex, how much difference would that make for the health of AAPL?

    Thx,

    Roger

  • ak

    ugh

  • peteo

    Can you go more into the 5 Week options. very confusing if there are only 4 weeks in a month

  • Jeff

    “I cannot put any simpler. Apple,inc is/was being sold off because its ticker is a proxy for $IRS. It was not being sold off because of $AAPL” – Travis, any idea how long this could last? 12/31 or less? thanks!

    • http://www.aaplpain.com Travis Lewis

      Can’t say for sure. Eventually you run out of shares to sell. I wouldn’t think you can go on too much longer.

  • Grardrake

    Travis, a bit of an expansion on my note. I, of course, can enter the site or there would not be this note, but I can not log in, as in the past.
    Drake

    • http://www.aaplpain.com Travis Lewis

      Do you have a user name? Just email me.

  • graydrake

    Hi Travis
    Can no longer enter your site. Do not know if this message will go thru or not. Any comments on this issue?
    Drake

  • Sean

    Travis at what point does someone need to start worrying about Jan OI? It seems to be a big wall on call side at $700.

    • http://www.aaplpain.com Travis Lewis

      Not right now. I’ll keep a watch on that and break out the JAJO tab again if I see fit. Don’t worry about it right now. Way too far in the future.

  • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

    travis where do you post your current stuff ? this is old ?

  • google

    pretty wide range. Do you see those $630s or $650s constraning the stock into Friday?

    • http://www.aaplpain.com Travis Lewis

      I can see $630′s getting worked off but I doubt $650′s.

  • Greg

    Hey can someone help me? where do I find weekly put/call ratio of AAPL? is there a website that I can look it up? thanks

  • Sean

    Travis, with all the calls at $700 for next week will that bring us down?

    • http://www.aaplpain.com Travis Lewis

      I think it will cause some turbulence
      with the stock but nothing major. Just short term price action is all.

  • Graydrake

    Travis
    Thought I had just posted this, but can not find it so here goes again, I am a high probability trader who limits trades to those with 200% annualized return (max prof/$ margin*365/days to exp), when there is a specific downside/upside protection based on time to exp. All trades on AAPL have been winners so far, most bull, but currently I am in the sep 720/725 bear call spd.
    Any thoughts on the risk of this trade?
    Drake

    • http://www.aaplpain.com Travis Lewis

      That’s right in between the high call
      OI and 98% strike. It has high odds so…What I do for selling call spreads is
      do a ratio against my long position so I cannot take a loss no matter what
      happens. I personally sold $755/$760′s for $0.31 Cr. So say my long aapl
      position will gain $10K if AAPL hits $760. I will then risk $5K on the call
      spread. If AAPL under $755 I make money, if AAPL $760 I make $10K minus $5K=
      gain. You can work ratio’s how you feel.

  • Graydrake

    Travis – I am a high probability trader and I am in the bear call Sep 720-725 spread, who enters trades only when they meet specific downside (or in this case upside) criteria based on time to exp and at least a 200% annualized return [max prof/$ risk (or margin)*365/days to exp]. How much risk do you see on this because of the Iphone meeting?
    Drake

  • Chris

    Hey there,

    What are your thoughts on where AAPL will settle this week? Sold a bunch of 630, 635 and 640 calls, debating whether to cash out tomorrow or hold til exp.

    Thanks,
    Chris

  • http://twitter.com/cfm860 Carl Muckenhirn

    Hey, Travis, do you keep historical charts? Before earnings the August CALL OI peak was around 620 (I think) when did the huge 650 position come it?

    • http://www.aaplpain.com Travis Lewis

      Yeah, I do. The $650′s were always about this high, what happened is after earnings a good amount of $620′s closed out. So $650 stayed same (came up little) but biggest thing was $620 went down.

  • Graydrake

    The premiums on AAPL frequently deliver terrific returns on the bear side and while I am long term bullish, I can not turn down trades that are winners will less than a 15 or 20% to the upside. I think this occurs because of all the euphoria about the long term potential of AAPL.

    In looking at potetntial bear trades recently, it seem your 98% range tends to hedge to the bullish side. I would judge that the probability of a win with your bullish limit is a lot greater than with your bearish limit. The high limit seem logical most of the time, but I have trouble coming up with the basis for your bearish limit. How do you arrive at this. Incidently, i rarely use the weekly trades.

    Drake

  • Graydrake

    I have a question on the bear side. While I am bullish on AAPL longer term, I have made some money on the bear side because the euphoria frequently drives the AAPL premiums to the high side. Your 98% pain range always is a bit conservative on the bull side, but seems to be aggressive on the bear side. Does your analysis drive these numbers or does you long term bullish posture on AAPL generate some hedging to the high side?

    The reason that I ask now, is that at the price and some negative news will, in my judgement limit the upside, more than the downside in the short term. Premiums on the bear side are not great so I may not enter, but I am leaning this way. Incidently, I normally go out more than a week.

    Drake

    • http://www.aaplpain.com Travis Lewis

      The #1 driver is the open interest (where the market as a whole places its bets). As a secondary crutch, I use implied volatility and expected volatility. Lately I have only been selling credit call spreads and not credit put spreads. I usually just stick to one side, I definitely don’t just sell iron condors every time. Feel free to go out further or come in. The #1 goal is to give people piece of mind when AAPL all of a sudden will hit a high OI strike and collapse. Then #2, is make money off of this. Using OI gives my great foresight to see where the markets targets are on high and low side and where there will be high probability sell/buy pressure zones.

      As far as the call side being more conservative, that may seem the case but looking to the past, the few times the 98% range didn’t work, it always was on the put side. Never on call side.

  • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

    TRavis the divend pay out , would that make the stock movement bullish towards the day of the payment august 8?

    • http://www.aaplpain.com Travis Lewis

      You should see buying come in for the Dividend.

  • Sandy

    Hey Travis, when would you say is the best time to get in weekly call spreads for next week?

    • http://www.aaplpain.com Travis Lewis

      Usually the best time to buy any long position for earnings is about 2-4 week prior to earnings.

  • BadCop_NoDonuts

    What are your thoughts on gaps and the idea that they usual fill? Got one this morning, actually.

    • http://www.aaplpain.com Travis Lewis

      I think all gaps fill (not all but 95%) That gap already filled in my eyes. I use the tails on candlesticks.

      • BadCop_NoDonuts

        ok got it. Do you count AH and pre-market for such things?

        • http://www.aaplpain.com Travis Lewis

          No Just use a daily chart. Don’t want to use anything with AH because that is where the gap comes from.

  • http://twitter.com/dansan1116 Dan Santucci

    Travis….have the 600 call/put indicated on the chart changed from your post on the 16th? I would think 600 calls would start to go down and the 620 range would be the new high O/I calls.

    • http://www.aaplpain.com Travis Lewis

      It’s changed a little. I think $610 becomes the highest OI, but said and plan for $620 as it carries no risk to be wrong to the upside.

  • Sandy

    Travis,

    Can you give a quick recap of what the OI tells us about where the stock might close the week? I know the puts provide a floor, while the calls provide a ceiling. That would suggest a close at 600. What I’m not too sure about is what happens when those options close and the pressure it puts on the stock. Can you summarize how that works?

    • http://www.aaplpain.com Travis Lewis

      I don’t think we close at $600 or under cause earnings around corner. But quick recap. You buy a $610 call, no one is willing to sell it to you, so I step in and sell you a $610 call. I have no desire to have a short $610 call. So I heged this position and buy shares of AAPL. On Friday you want to unload this position so you sell it. Again, no one wants to buy it, so I step in. We both close our options position, but I bot shares too. I sell these shares as I don’t need them anymore as a hedge.

      Multiply that scenario by 20K contracts. That will give weakness to AAPL.

      Scenario #2. I sold you that $610 call but I don’t hedge it or only hedge it 50% of the way. AAPL gets to $612 on Friday. This is bad for me and good for you. I need that situation to change. I somehow, someway, start selling shares or get people to. Stock expires $609 and. I win, you lose.

      It’s usually 99% scenario #1, but I’ve seen it obviously 99% scenario #2 as a rumor will come out just in time for the close.

      • Marcellus1

        But it takes BIG $ to own the shares that hedge the call writing. Isn’t it more plausible that the call writers hedge their position by buying to open similar calls they wrote 2-3-4-5-6 months back, thereby locking in the gains represented by the premium they made AND buying to open the same calls for much less? Conceptually, if the writers of the calls are the same as the buyers, there is no OPEX, provided OI is approximately equal. The writers of the calls of course own inventory of AAPL to sell the beejesus out of it to ride it down to repurchase the calls they wrote.

  • Tigerpaw 1973

    I don’t see the Amazon link on under the Amazon tab.

    • http://www.aaplpain.com Travis Lewis

      Hmm, what browser are you using maybe? I checked with mac, iOS and IE and was there.

      • Tigerpaw 1973

        I’m using Chrome (PC at work)

        • http://www.aaplpain.com Travis Lewis

          I added a standard text link.

  • Dr.RX

    Thanks Travis,
    So it seems like a key question is how much of the non-retail money went hedged, enabling Apple to rise or fall without OPEX pressure. If yes, are there any clues to divine this? Any hint of what day may be the best day to unload a $600 call position this week? Thanks in advance!

  • Dr.RX

    Travis,
    What is the chance that the writers of those $600 calls purchased many of them back for 10 cents on the dollar (given the May/June weakness). They’ve hedged them and no longer need to sell AAPL near OPEX. At $600 per share, it takes more dollars to drive AAPL south, and even more money because OI is getting heavier. Also, a fundamental question: If the writer of the call repurchased them, does OI stay the same?

    • http://www.aaplpain.com Travis Lewis

      To keep is simple: Non-retail money that holds any short calls could have locked in a gain at any point and went 100% hedged. So AAPL can move $50+/- and their profit was already locked in. Where AAPL has a hard time escaping some selling pressure, is when retailers or non-hedged money closes their calls. Because now the 100% hedged writers, need to unwind their hedge and sell stock.

      OI changes depends if a contract was STC/BTC, STO/BTC, STC/BTO etc.

  • BadCop_NoDonuts

    Should be very educational as far as seeing how things go with this set of events and parameters. And long term, I’m curious to see what happens when more and more investors jump on the OI bandwagon.

  • Danny S

    Hi Travis, do you expect this to go elow 600 next week as the high call 600 OI is several times the puts OI?

  • ddh72172

    looks like the 600 calls would pull the stock back toward the 600 level for next friday expiration. your thoughts?

    • http://www.aaplpain.com Travis Lewis

      I don’t think they will. Will/is causing weakness but it will run dry.

      • Ddharlan

        Where would you peg weekly and monthly expiration?

  • BadCop_NoDonuts

    Can I assume that Andy Zaky’s rejected SA article was similarly bullish as his Dec. 2011 article?

    • http://www.aaplpain.com Travis Lewis

      Basically when stock was $540′ish it was a buying opp. Same bullish tone.

      So crazy how Wall St confuses so many people with its same old routine.

  • BadCop_NoDonuts

    would you still sell July monthy calls in this situation (earnings)? If I remember correctly, you avoid “events”. Or is it Aug. you would avoid?

    • http://www.aaplpain.com Travis Lewis

      July opex is before earnings. I would sell a July no problem. I also sell covered calls on earnings day everytime because the IV is so high. I may sell $50+ OTM, but I’m going for the IV crush and slight protection from a sell-off.

  • google

    do you think that $600 OI peak is likely to be a limit for 7-21 OPEX (not in terms of selling credit, but based on your experience up to now)? That’s a lot of calls to let expire ITM. MM won’t want to do that, right?

    • http://www.aaplpain.com Travis Lewis

      With earning so close to July opex, I would think with a few tries, AAPl will be able to get over the $600 strike. At anytime, anyone who holds those short options, can lock in gain/loss and go 100% neutral.

  • google

    Travis, it says July, but today this is still the graph for June, right?

    • http://www.aaplpain.com Travis Lewis

      June opex is over. This is for July.

      • google

        Wow, $600. I guess that could change quite a bit in the coming weeks.

  • http://profile.yahoo.com/WMX7WVGOH3DVTQZYRWJMLJJLRE mike

    Hey, Travis. It’s hard to tell when the Max Pain graphs have been updated if you don’t put dates on them. Your information is invaluable, except when we don’t know for sure which week it’s for, as on Sat/Sun with no dates. Thanks for what you do.

  • Tom

    Travis, do you think 500 is a realistic target (50% retracement) given what were seeing. Although considering how oversold everything is, shouldn’t a big rebound be right around the corner

    • http://www.aaplpain.com Travis Lewis

      Rebound will be coming soon, especially how close we are to 1,275. I thought AAPL would flatline up and down of $560 all spring summer, I didn’t think would head down this low, this fast. So this isn’t surprising as I didn’t see upside, I just never saw this type downside action.

      This happens with AAPL lots of waiting

  • NotThatDumb

    it appears that the press disagrees on FB allocation. Retail apparently got a huge allocation of FB and in fact everybody got what they asked for and then some… That is unbelievable. Where do you get your data?

  • Graydrake

    Travis, in most respects you are conservative, so the “speculation” on an end to the near term AAPL fall seem out of place. As a conservative trader as well, I normally stay on the side lines until there is a technical confimration of my thoughts on probable movement direction. I lose some money on this delay, if I am righ;, but I avoid a major problem if I am wrong.

    Is your feeling on an end to the drop based primarily on the existing great fundamental resources of AAPL, or some technical or trading data that most of us would be ignoring?

    Drake

    • http://www.aaplpain.com Travis Lewis

      Based on cash ratio, PE, FB money will come out of FB and into AAPL and how the June put profile looks. More people buying puts than normal. All that combined.

  • awake

    Why is your OI graph different from http://www.maximum-pain.com/openinterest/AAPL.aspx ?

    Are there multiple sources to get this data from?

    • http://www.aaplpain.com Travis Lewis

      I update mine before anyone. They are probably hooked into a delayed feed like 99.9% of sites are.

      • awake

        Where can I find a close to real-time feed? I have read this info is only available on a daily basis and if that is the case where can I find one that is most up to date?

  • Roger

    Travis…$600 Calls OI looks like the Pyramid in SF, towering over all other OIs. Almost like the head of head/shoulders for those who follow technicals. Shoulders are way out – $550 Puts on one side and $650 Calls on the other side. Any color to this pattern? Thx as always, Roger

    • http://www.aaplpain.com Travis Lewis

      My take: Don’t get too excited for AAPL being above $600 next week. I still think AAPL hangs out. I don’t think those calls cause a sell-off as they are too far OTM for them to effect the stock. (basically, people will not close them but leave them to die)

  • http://www.facebook.com/people/Mandy-Froula/100002690336914 Mandy Froula

    If Apple traded at Amazons P/E ration, it would be worth $8000 per share 8-D

  • Yustas S

    Travis, when you talk about your chart above and OP, you sometimes mention “buying pressure” and “selling pressure.” Could you please explain what it means? Thanks.

  • Roger_sach

    Travis
    When do you anticipate IV to peak prior to EPS day? Any idea of the Calls IV – Schwab platform is showing 66+ for Calls IV even though IV for individual strikes are different and lower. I’m following your lead by buying Leaps and now I want to write May Calls prior to EPS.
    Thanks,
    Roger

    • http://www.aaplpain.com Travis Lewis

      I think IV will peak right here.

  • http://www.facebook.com/people/Mandy-Froula/100002690336914 Mandy Froula

    Check out this video my man

    rumor mill cranking up just in time for the monthly opex ;)

  • Mrpbadvice

    Your system appears to work beautifully for longer term investors but you are more often wrong than right weekly for very short term such as this day or the last Fridays. Today you suggest a lower opening – (got that right) ” with a crawl back to 600″. You could not have been more wrong. I am not being critical but mindful.

    • http://www.aaplpain.com Travis Lewis

      But I don’t have anything on this site where that opinion would have turned into an action. Where did AAPL close? Where did it close last week?

      Also, I personally didn’t take the trade, but when AAPl crossed back under the $600 strike, is your sell signal. I have talked about this many times, in last week’s video. A commenter even asked if he should use that as a sell signal. Again, I didn’t want to use it but not using any emotion, once again, the options market showed it was correct in predicting the future.

      I trade 98% probability. I have only been wrong a handful of times of knowing where AAPL will not be.

      When was the last time my 98% range was wrong? If you used the highest OI strikes as buy/sell points on their way back over, meaning use the call strike as a sell signal only when it comes back down thru it, then again same for puts?

      But now I just gave away what should have been worked for.

  • Sean

    Travis do you think $580 will hold today? Looking to buy for up MON/TUES was planning to wait until last hour but feels like this could be a good point to start!

    • Sean

      Travis no need to answer this one. I took a gamble on a spread for small amount way out of the money put spread I was up and sold for a double thought that was great, if I held it would have closed out as a 10 bagger. I’m still happy with it small bet anyways, I also hit doubles on 2 other stocks using highest open interest all small amounts but starting to get this down I hope. In your opinion does this seem to work with most stocks? Thanks

      • http://www.aaplpain.com Travis Lewis

        Nice, yeah, I like to just take in small gains and no losses. I really only mess around with AAPL and little SPY. Takes up all my time and cash :o)

    • http://www.aaplpain.com Travis Lewis

      Hey, Sean. Nice call on listening to what the options market was telling you earlier in the week. (using the $600 strike as a sell signal, when AAPL was on its way back down thru it) It wasn’t that I didn’t see/know it, it’s that I had an opinion and earnings. Whoops, turns out opinion needed not to be applied. As usual, whenever I discount the options market, I get proven wrong. In this case, glad to see the strategy is still valid. I never took advantage of it, but hey, there will be another few million of them in my lifetime.

  • BadCop

    absorbing this as fast as possible. I’m not an option writer yet, but it seems that you are basically saying that if someone with shares wanted to sell an April call, they could safely sell it just above the $620 strike. That is to say, you have expressed 98% confidence that AAPL will NOT close above $620 on Friday.

    • http://www.aaplpain.com Travis Lewis

      Yeah, take your time before trading this. There are many ways you can use this data, to sell options, or use the strike as buy/sell points for common stock or buying puts/calls. Maybe run through those latest 2 video’s on the home page.

  • Rick

    What do you feel the stock will goto on Wednesday after earnings? You had said that you thought $40 EPS so what does that translate to in a stock value? I am just wondering if the stock will probably spike on Wednesday. I know there is going to be a volitility crush on Wed as well so not a good idea to hold on to bought calls and puts.

    • Rick

      I went back and backtested several years of earnings reports to see what the drop in volitility would do and it didn’t seem to make a difference with apple. I actually don’t understand but the stock went up and the options went up as well. I thought that the next couple days the options value would go down due to the volitility dropping.

    • http://www.aaplpain.com Travis Lewis

      I don’t play earnings with any short term (days) plays. Way too many variables and probability is greatly lowered. It’s basically, what mood is the street in? If AAPL misses GM by 1% the street may make a huge deal out of it. You just never know so I stay away.

      I always have long AAPL, just nothing where I will get stuck. I do sell puts/put spreads and covered calls though.

  • Al

    I wonder why you put the range between 550 and 600? I mean there is a high call OI at 650 and between 600 and 650 there are a lot of call contracts ( at least as many as puts between 550 and 600).

    • http://www.aaplpain.com Travis Lewis

      I use the highest OI strike for both puts and calls for the 80% range. It’s not my 80% range. It’s based on historical odds.

  • Ted S.

    One thing I don’t get about this is when the weekly and the monthly have the same expiration. How do you reconcile a different probability range for two that end on the same date? There is no difference between a weekly option that happens to be opened on the last week of the monthly and the monthly itself or is there? Sorry if I am missing something obvious (which I surely am) 600-650 is the 98% for the weekly, 535-635 for the monthly yet they both end on Friday.

    • http://www.aaplpain.com Travis Lewis

      No weekly this week. Only monthly.

  • Yustas S

    Travis, in your latest update you said: “The biggest thing I want everyone to walk away with is knowing ‘why’ this weakness is occurring.” – I do not get it. Could you please explain why? Thanks.

  • Yustas S

    Travis,

    You said that the 80% range is the highest strikes. I assume you meant where the highest OI is on Puts and Calls. Do you look at Implied Volatility? What if you see that your range is different from the range derived from IV? How do you reconcile the two? Thanks.

  • Mike223322

    Travis –

    Do you think that because next week’s (April 27) options get issued this Friday, and because next Tuesday happens to be the earnings release, that buying pressure (people opening up the new weekly call positions) will offset the monthly OPEX selling pressure?

    Thanks,

    Mike H.

    • http://www.aaplpain.com Travis Lewis

      Sorry been really busy, kinda too late now. Sorry. I think the sell pressure came yesterday, 1 day early but the trend that matters.

  • Sean

    Travis if we break below $600 is that our sell signal (Buy Puts)? Based on the way Apples trading today do you think we will continue to sell-off until Friday? Thanks

    • http://www.aaplpain.com Travis Lewis

      Monthly is a different beast than the weeklies. See how there are a bunch puts and calls at $600. That doesn’t happen on weeklies. So yes, it would be a sell signal, but I wouldn’t be looking for any big drop though because the puts. Basically you need to switch it up a little on monthly vs weekly. I think Friday would see weakness or at least not some big gain. Since I like to play the high probability plays and I have no idea what will happen, I took the for sure bet this AM. I sold $635 covered calls to take in credit. Now I just locked in a for sure thing.

      There are times when things are easier to see and high probability. I just wait for them to appear. I don’t look for them. In the mean time I play the outside ranges and stay away from the inside chaos.

  • Rick

    Just when I think I have grown up and put my big boy pants on, I do something stupid and chase an early spike, then 45 minutes later, I’m kicking myself!

  • Yustas S

    Travis,

    How do you determine the range? Is it simply the distance between the highest OI on the Puts and the highest OI on the Calls? Also, where is the so-called Max Pain (not the conventional one, but your style)? Thanks.

    • http://www.aaplpain.com Travis Lewis

      The options market determines the 80% range. It’s just the highest strikes. My max pain is the 80% range, anywhere inside there is all the same in my eyes.

  • Ddharlan

    can you in any way incorporate the VXAPL into your studies? This more than anything controls the pricing of Apple options.

    • http://www.aaplpain.com Travis Lewis

      The OI plotted already takes care of this. The higher the vola, the wider the range will become. That’s the cool thing about the options market. It’s real money so everyone has already accounted for all the upcoming news.

  • Yustas S

    Travis,

    How do you come up with this chart? Do you simply plot open interest for Puts and Calls? What do you think about also including the volume on the chart for strikes that you show?

    • http://www.aaplpain.com Travis Lewis

      Yeah, just simple graph. I don’t pay attention to volume. Way too much of it is all day trades. Only day I watch volume is on Fridays if I am trying to predict exactly where AAPL will close. (for a trade, prob once a month)

  • Tedde

    Why don’t you show the net instead? (puts-calls)

    • http://www.aaplpain.com Travis Lewis

      Because I need to see where buy/sell interest comes in.

  • Rick

    Travis,
    In the last minute of this week’s video you said that if AAPL had a weekness this Friday because of Options expiration to “load the boat” because AAPL would be going higher. You meant buying shares of apple not call options, right? I know that I will buy call options Friday but I will also be selling them Monday or Tuesday due to the volitility crush which will happen Wednesday because of the release of earnings. Would you please explain this in a bit more detail because I know that I want to take advantage of this but I also want to do this properly. Would selling puts Tuesday before earnings be a smart play while the volitility is super high? Is Tuesday too late?? Thanks for your input, it is truly valuable to all of us.

    • http://www.aaplpain.com Travis Lewis

      You can take any bullish position you like. I prefer to stay in longer dated options or stock to protect from unknowns. But thats why I also don’t hit home runs. It’s fine if there is weakness on Friday to use a front month options and sell it Mon-tues. We can’t go back in time but buying at the high put area was pretty high probability going into earnings. Now just take it as, if there is weakness Friday, buy it. If not, thats how it goes. AAPL will have a million more earnings in your lifetime.

      Volatility is really high right now. I sold some May put spreads this AM while AAPL was down in $585 area. If you want to own 100+ shares than yes, selling puts is great play for earnings. Sorry didn’t go into more detail, limited time right this second.

      • Rick

        We had such a great bounce back today, I bought calls but sold them right at the end of the day because I figured we probably will have a relaxing either tomorrow, thursday or Friday. When that happens I will get more calls to resell Monday or Tuesday. Patience is the biggest key. This is not like going on vacation, get it all in as quick as you can. I am learning that using your site and not feeling like you have to be “in” every day is actually more profitable. Playing the Buy M,T, sell TH, F…. Buy back in F. is good but not every week. If it doesn’t look right, wait. Oh…. one more thing. If I wouldn’t have gotten Greedy last tuesday and just taken my nice huge profit at the spike like I thought about doing, I would be up a lot more right now. I still got out at $628 but my account is large enough that it was a big pill to swallow.

        • http://www.aaplpain.com Travis Lewis

          There you go Rick. Thank you so much for sticking with it. I preach: Do not take this system on day 1 and go all in. Sit back and take it in for 3,6,36 months. Who cares. But once you do, it will change things. Your mind clears and noise is pleasure — because you know the joy in which your hard work is about to accomplish once things become noisy.

          Remember, you have the rest of your life to trade — and — how many times have you wished you had a mountain of cash? Don’t ever let that feeling of lack of cash happen again. F’ what everyone else says about cash. I put a NPV on my idle cash of 10% at all times. It may sit 364 days at .01% and 365 be worth 112.125%.

          Take the high probability road, don’t go down the Jones’ road. We all know where that leads. It leads to being like everyone else. Standing in-line for lottery tickets.

          Aaplpain switches minds, we are the folks selling those lottery tickets. Who has better odds? (may never hit home runs, but also not begging for cigarettes)

  • Sean

    Travis I sold my weekly calls at $599 looking to get back in, do you think if we can get to $605 that would be a good buy back in? Comparing this play to your video this week? Thanks

    • http://www.aaplpain.com Travis Lewis

      I’m still holding my buy from $580. If it were me I would wait it out a little bit and see what happens. What I will did is sell calls against them on this pop. Now I have protection and income.

      • Sean

        Travis I think I got it backwards now that HOI calls is at $600 if we goto $605 then back down below $600 that would be a sell sign right! Thats what your video explained I think?

        • http://www.aaplpain.com Travis Lewis

          Don’t get down on yourself, read what I wrote to Rick. It will become clear after a while. You did great buying $580 and selling $600. Perfect. Could you have held on or started selling calls at the $600 strike? Yes. But was Rome built in 6.25 days? Nope.

          When earnings is involved I change things up. I bot the AAPL at the $580 put strike and planned it for my earnings run-up. Now m mind is cleared of April OpEx, I took advantage of the $580 nd will hold until Mon-Tues then dump it or hang on to it with an ITM/ATM call.

          I think you did better than 100%% of the so called pro’s.

  • Yustas S

    Travis, could you please explain the difference between what you are doing and conventional Max. Pain? It seems that if the goal is to see the range, either we count open interest or the money amount, we see the same range, because the money ammount is derived from open interest. What am I missing? Thanks.

    • http://www.aaplpain.com Travis Lewis

      I use it for many different things. For example buy/sell points or where to sell options. The dollar value way does not show you where you would buy/sell. Like with dollar value whats the difference between the $580 and $585 strike? Nothing. My way there is a world of difference. I also have a completely different max pain area at times. I’ve seen dollar value show $50 difference from my so to speak max pain point, yet mine ended up being the one that was 10x’s closer (has to be noted I do not subscribe to an exact MP point or strike)

      • Yustas S

        “Like with dollar value whats the difference between the $580 and $585 strike? Nothing. My way there is a world of difference.” — Well, assuming the said strikes have different open interest, $580 and $585 strikes will have a different amount of money on them, but I am not sure I understand what you mean. What is the difference in your case? Also, why do you have completely different max pain area at times? Thanks.

  • Sean

    Travis in one of your past videos you mention if we see a down MON/TUES look for up THUR/FRI would that apply this week with monthly expiration or are you looking for a down Friday as well?

    • http://www.aaplpain.com Travis Lewis

      Yeah, it does start to go inverse like that. It’s because of the puts. (Friday’s could be down depending how much AAPL rebounded, I’m talking in general)

  • Sean

    Travis do you feel $580 is a good buying point or do you feel we will see more weakness throughout this week with options closing out?

    • http://www.aaplpain.com Travis Lewis

      I think $580 is/was a good point. You can go 1/2 there then other half at <$560 or $600 on way back up. Or just leave on that 1 buy and that's how it goes.

  • http://twitter.com/scottparkhill Scott Parkhill

    I am a huge fan. I think you have it figured out about as well as any of us regular guys ever will. I do have a question about the ranges though… Just to simplify, let’s assume I want to sell covered calls outside of the 98% range

  • Sean

    Travis you mentioned in the video the trend not changing, but you also stated we “MAY” see a $5-$10 up Monday and then sell-off possibly to $580 then load the boat. I’m confused if trend is same wouldn’t we see more than $5-$10 up Monday-Tuesday then sell-off?

    • http://www.aaplpain.com Travis Lewis

      When I say trend, I mean bullish or bearish. I think AAPl is still trending bullish even if we sold off to $5xx. I have longer time frame than days. As far as up Mon-Tues, that is more of a probability play or odds. AAPL has higher odds of being up Mon-Tues than any other day. This is in any market. Could be in a full blown depression and that probability would not change.

      So to recap. If the trend changed then I see AAPL highs in for a while, months and we will be trending lower throughout the coming months. I don’t see that to be the case. Up Mon-Tues is a statistic, nothing more.

  • Shoc13

    Hey bud,
    Sorry ref repost – didn’t think it went thru. Thxs for reply

  • Shawn

    Travis,
    Call me paranoid :) but I can’t shake the feeling that those 600′s won’t be left alone to expire in the money. Thoughts?
    Shawn

  • Shoc13

    Travis,

    How strong will the $600′s be? Will they be able to pull the stk back to the sub 500′s 3 days before an amazing quarter? R they that powerful?

    • http://www.aaplpain.com Travis Lewis

      I think people will leave those on until 4/20, therefore not concerned with them. I think it will cause selling but not until 4/20. It will cause a ‘red’ Friday.

      • Shoc13

        If no one wants to sell (because so close to earnings), wouldnt this cause the price to increase even though there are all those sellers?

        • http://www.aaplpain.com Travis Lewis

          There are so many dynamics to the market. I wouldn’t be concerned with AAPL weakness this week. Nothing abnormal.

  • Jeff

    Travis – a great deal of those 4 high OI put strikes have closed out today – what’s your take on this?

  • http://profile.yahoo.com/5GRPPSEI357BLWS3UV4RSTLZ4A Michael Saad

    Looks like the value is in destroying the bears on this

  • http://twitter.com/lionthytrade LionThyTrade

    Travis does the general logic here follow, regarding your 3/18 comment above…that all those Money Managers that sold those $540/$550/$560/$580 puts to all the “put spread purchasers” (suckers), …that the Money Managers now have a vested interest to initiate a stronger level of buying aggression around the 580 range because they want the premium that they sold to all those sucker to deteriorate worthless. As in since they sold them to the suckers, it essentially puts in a floor around that area.

    Is that what I’m understanding here?

    So if there is an AAPL sell off this month, the strongest floor where buying aggression would come in hard would be in the 580 range, right?

    will donate to this site. thanks for the great work here. I didn’t get a chance to meet you formally @ the Summit but I did see you there! Thanks again

    ::Mike

    • http://www.aaplpain.com Travis Lewis

      Hi Mike,

      If the institutions who sold those put spreads are 100% hedged, then they don’t care if AAPL goes to $0 or $1,000. I would think that some left a little unhedged so AAPL expiring above them would be best. By now they have big profits in them though. You should see some buying come in around $580. The strongest buying will come in under $540 as that would hit everyones downside target and those put holders will start to close. This is all an ‘if AAPL were to ever even get down there’

      Sorry we didn’t get to meet. Next time.

      • http://twitter.com/lionthytrade LionThyTrade

        Thanks ::T

  • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

    travis can you tell me how the puts can put buying pressure on the stock? The put spread buyers ( ME ) I am just buying the spread and selling the spread. I am doing nothing with the stock…..

    you mean the market maker . the ones that create the puts have to go out there and buy the stock every time one of the spreads is in the money?

    I dont understand !!!

    • http://www.aaplpain.com Travis Lewis

      It has to do with hedging. If non-retailers are on the other side of your puts they will have to unwind their hedge if you were to close your position or as time passes and opex approaches.

  • Mickey

    Bought the April 12 expiration 560/540/520 put fly net debit $3 this morning. base on the huge volume of the 560/540 spread instituitionl money put on this week. See the April 560/540 put OI.

  • Teddo

    The lines in you charts suggest the OI is continuous which I guess that it is not?

  • Mrpbadvice

    What does “range bound” mean?

  • Headedhigher

    Gosh, a 125,000 calls ITM that need to close out this week, going to be a wild ride

  • Chet

    What do you mean by “Mode: above?

  • Mrpbadvice

    Perfect call and strategy – thanks

  • Jeff

    Travis, what makes you believe that calls being closed triggered the sell-off? Is that something one could read off from today’s options volume – where would one have to look? Since we had such a hard sell-off, does this mean that for now there are no more buyers left? Thanks!

  • Roger_sach

    Today’s profit taking causing selling pressure caused by stockholders selling stock, callbuyers closing calls meaning MM selling stock, did I get it right, Travis?

    • http://www.aaplpain.com Travis Lewis

      Yeah, it all started with call buyers closing their positions from today or just their Feb’s in general, that starts the process and others jump on. Tweeted that out this AM.

  • http://www.facebook.com/people/Mandy-Froula/100002690336914 Mandy Froula

    Hey travis, Im calling for a crash by the end of this week what do you think ?? I have never seen such a parabolic upturn! I feel like that has to end in a crash soon in this age of AntiApple rumors and option controlled markets… Because if all these calls you have on the graph up here expire at the current price of 500, Then all these calls are excersized and wall St takes a huge hit right?

    • http://www.aaplpain.com Travis Lewis

      Options don’t show anything like that so far.

      • http://www.facebook.com/people/Mandy-Froula/100002690336914 Mandy Froula

        Well if you look at stock price of $500, the first area where the call and put strikes match up is all the way back at 480, so that tells me that the stock will begin to gravitate in that direction with that wall of calls at 500 expiring Friday you know?

        • http://www.aaplpain.com Travis Lewis

          Thats more of a dollar value max pain way. Thats why I use a range and not exact strikes, then I use how the stock reacts against certain OI strikes. This will tell you how strong AAPl is or its direction. More of something I have learned over the years. No cut/dry answer. My way or site is not static like dollar value max pain.

          • http://www.facebook.com/people/Mandy-Froula/100002690336914 Mandy Froula

            OK so do you think that the stock price evolves more naturally, or that it is forced into areas that will hurt the option buyers the most by the Wall St market makers? What I mean is do you think the reason behind the stock price always gravitating within these boundaries is because once the stock price ventures outside of these boundaries, the options are exercised and the stock price naturally gravitates back behind the boundary it has passed, or do you think that the same people who are writing these options are the same people who can create rumors through the media, and use their buying power and influence to force the stock where they want it to be, or a combo? Because What I’ve noticed is that the media surrounding even big scale events sometimes seems to be option related. For example, If the 3rd friday of the month is right after an earnings report, The earnings report is automatically portrayed negatively by the media, such as in October and January 2011, however, if the 3rd friday is right before the earnings report, Such as now and in July, coincidentally the earnings report is received by the media as the greatest thing since fried bread. Because what I’ve noticed is the stock price on every third Friday of every month in the past year is substantially lower than the moving average. What do you think?

          • http://www.aaplpain.com Travis Lewis

            You were few days early :o) (just joking) Yesterday you started to see early in the AM, what you were saying, way too many calls started to get bot and the options market turned out correct again. Much of this is not my opinion; it’s what the options market says has to happen. I only try and relay it and when I use heavy opinion, I usually end up wrong. Nice job.

  • Mickey

    I just sold half of my postion of long calls only and put on a protective collar selling Feb 18 485 calls for 1.84 and buying the Feb 18 460 puts for 1.84 net zero but $12.95 trading costs. Not bad for a little protection for my remaining July 500 calls for next to nothing. If this monthy is correct and AAPL does not close above 485 by the end of next week or even pulls back to the 450 put OI, then I may even come out with a profit on both legs of the trade. I rarely trade collars but I think caution is warrented due to the 100 pt run since dec.

    • http://www.aaplpain.com Travis Lewis

      Congratulations on the gains, nice job.

  • Anonymous

    Travis, in your videos, (great work on those, I’ve learned a lot and never miss one=) you mention that you use the monthly OI to make trades and have not missed yet. Could you please tell us when exactly do you make these trades? Do you wait until 1 week out? 2 weeks? How much OI data do you feel is a good balance between having a solid idea of what the range is and enough time value to make the trade worthwhile, (for example, on spreads, if there is not enough time value the cost of the spread on, as an example on a 470/475 bear put spread is over $5, meaning that one simply can’t make any profit on such a trade).

    Any wisdom on your part would be greatly appreciated.

    • http://www.aaplpain.com Travis Lewis

      For monthly spreads I will make a trade soon as it becomes a front month or at the lasts a week in. What I show in my portfolio model spread account is how you can keep it ultra conservative and still make about 100% return a year. I am not always using the highest OI strikes, I am backing it off a few strikes for safety and if I think the OI strikes may change, I account for this.

      If I use the highest OI strike and kind of blindly sell it without looking at ay econ data. I guess saying if I had a computer model that just spit out a trade. I would not use a spread put a cash secured put or a covered call depending which side I was selling.

  • Rkefauver

    Is this the Feb 18th monthly?

  • Guest

    Travis, if we get a 420 pin, does the options action fully explain that? If not how big of a role are the options playing versus any number of other factors (Google disappointment, concern about a 2nd miss, etc.)

    • http://www.aaplpain.com Travis Lewis

      Don’t worry about a pin, that’s subsequent action. Worry about, why did AAPL get rejected at $430? Why did it get shoved all the way down to $420? What caused that 1st sell-off at $430? That is where the snowball begins. Don’t waste your time with pinning. Pinning can happen at $400, $410 etc just as easy as $420. What can’t happen at any strike is AAPL getting beat down from $430. Also, look how many options expired worthless at $420.

      See if this article helps http://seekingalpha.com/article/316922-apple-and-the-difference-between-pinning-and-open-interest-max-pain

  • Jeff

    Travis, does today’s (01/20) low volume surprise you – 3 trading days before earnings? shouldn’t it be much higher? thanks!

    • http://www.aaplpain.com Travis Lewis

      No, whole market has been low volume. I like it. Lower the better in my eyes.

  • Guest

    Travis, is there a way for you to quantify how much Apple is being held back by options expiration? If January options suddenly disappeared, what does your gut say about the kind of movement we would be seeing ahead of earnings? Do you suspect the flood gates are going to open on Monday?

    • http://www.aaplpain.com Travis Lewis

      No, I can’t say I have a quantifiable way. I can only say ‘higher’. If options didn’t exist I think AAPL would have a 25 P/E+. As far as this Mon-Tues goes, gut says $430-$440.

  • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

    what is your twitter name so I Can follow u ?

    • http://www.aaplpain.com Travis Lewis

      @Aapl_pain Or just go to home page, I have stocktwits or twitter, they are linked so both the same.

  • Anonymous

    Can you explain why the OI of 380 puts NEVER came into play this week???? I was a seller of 435 & 440 calls and a seller of 400 puts. My week finished beautifully, but I was sweating the open put interest based on your chart. Thankfully it never happened, but why???

    • http://www.aaplpain.com Travis Lewis

      What do you mean $380 never came into play? I use the highest OI strikes only as will not go below or above. I don’t ever look at them as if AAPL will touch them. I look at stocks of, “where will this stock not be on opex. So I see $0-$380 and $440-$1,000, any other number I don’t even see.

  • Chris Guirguis

    So Travis, based on the graph above, is it more likely that Apple will pin at $425 or $430? If I understand correctly, the fact that there is much more OI on the 430 calls than on the 425 puts indicates that there’s mode downward pressure. That means the max pain is closer to 425 making it more likely the stock will pin there. Am I getting this right? Or would it be more accurate to take the sum of the call/put OI at both expirations and see which one is less – the lesser one being the MAX pain?

    • http://www.aaplpain.com Travis Lewis

      The stock won’t pin every week. It depends on what strikes are trading the highest volume on the day of opex. If say the $425 puts are the highest and $430 calls, then it will just expire in the middle. If $425 is highest then will expire there. Pinning isn’t a big deal. Why did AAPL not finish above $430 this week is. A $425, $427, $430 close tomorrow doesn’t matter, all the same in the options world.

      • Chris Guirguis

        Thanks Travis. Another question though – what’s the probability of AAPL closing at 425 or above? I mean, if there were enough selling pressure to get there, wouldn’t there be more option pain at say, $415? Could it theoretically cross back below the 420 call OI peak or is it very improbable given that tomorrow’s Friday? In other words, if the probability is high enough, would it make sense to make some money selling the 425 puts tomorrow morning?

        • http://www.aaplpain.com Travis Lewis

          I guess I’m evading the question because I really don’t care what happens tomorrow. (don’t take as being mean to you) Earnings is too close to trade this data. You would have wanted to make your bet a while ago. If AAPL closes $420 or $435, either way, it just doesn’t matter. Come Monday all this option pressure will go away and AAPL will resume up. So, overall, I’m just watching the price action as entertainment. If AAPL dropped to $400 or $420 tomorrow, I will know its options related and take advantage of it. If some mutual fund comes in mid day and pushes up to $435, so be it. Point is, this is event time with 1 day left of opex. Things can get very irrational. It’s too late to try and trade this data. Don’t worry, will be plenty other months. There is no probability for the $425 or $430 strike as they are not the highest OI.

  • Tpeglow04

    Travis, love your site and education. Can you tell me on “My take on 98%: 375-405″ have you not updated that or do you believe with a 98% confidence interval on Jan. 21 option expiration AAPL stock price will be between $375-$405? Thanks…

    • http://www.aaplpain.com Travis Lewis

      I’ve had the $405 in red all month, so my take was $405 will not hold. The “my take on” is just my opinion on the 98% range. As the 98% range isn’t ‘mine’, it’s just a statistical measurement. I needed a way to give people my opinion of that range is all.

  • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

    Travis are you still holding the 375-405 for Jan 21 exp ?

  • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

    travis your take is still 375-405 for jan 21 opex?

    • http://www.aaplpain.com Travis Lewis

      The $405 is in red, so my take is it won’t hold. I don’t have any short calls at the moment. Waiting for earnings then will write some covered calls.

      • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

        Travis, please patience with me…please If the max OI is 440 and that is where your arrow is I don’t understand that 405 would not hold … I see your post The $440 is now your upside target. Again, that is the strike AAPL CAN get to, not will get to. But at least a clean path exists.

        ? so are you thinking we may pullback all the way to the 400 being that 405 won’t hold … ? thanks again I promise I will get it soon ..

        • http://www.aaplpain.com Travis Lewis

          The $400 strike is the highest call OI no matter what. If you were a computer you would use $400 strike. All other call strikes would not even register, binary. We are not computers. So my personal opinion from studying options now comes into play. I personally think the $400 call strike means nothing. I leave it up there in case someone wants to use it, or I always show the highest OI strikes only as everything I do is based off of that probability. Apple is going to expire above $400, that is just the 20% coming into play or the 2%. But as pointed out many weeks ago, there were many tells on “don’t use the $400 as it won’t hold”

          So my personal take is we can go up to $440, this goes against my highest OI theory. That’s ok, things come up where you can see this is going to happen. This month was perfect example. Also when events come into play, all bets are off, you wouldn’t want to say any of the strikes will hold as volume will easily overpower the options market.

          • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

            Hey Travis thank you for the amazing explanation ! I get it !!!

      • Veb Falcon

        Travis. I am actually slightly concerned with aapl this upcoming week. Was looking to go long into earningoutthought it might pull back more this past week. But feel I may be too late. Doesnt feel like it has much room to run before next tuesday. My concern is heightened with some of the posts and sentiment at 375 to 405. I know its aapl and could get crazy too, traded it many times but additional insight on your sentiment would be great. Thanks!

  • Skipper1290

    I update my own Apple pain chart and my take for the monthly price is there’s no stopping Appl from taking off
    ..just hit triple top breakout at $422.00

  • Jeff

    Travis, why do you read it as a good sign that put OI 380 came up? Wouldn’t it be much better for bulls if put OI went up @400 or 410 (instead of 380)? Thanks!

    • http://www.aaplpain.com Travis Lewis

      For the most part I only pay attention to the highest OI strikes for both put and call. Thats why I mentioned $380 puts. Your right though, it would of been great if say the $400 puts shot way up. For an AAPL bull, you want to see 100% put and 0% call OI as an extreme example.

  • Mikadomu777

    Travis,

    I wonder whether you could describe us the typical scenario you believe is happening during a typical week without major events – e.g.: Monday and Tuesday: smart money is selling call and put options (to whom? dumb money/retail?) and thereby setting the max pain ranges for aapl for that week. Wed & Thu: smart money is “manipulating” the stock price by buying back their options if the stock comes too close to the strikes they sold. Fri: Closing out of long options (held by dumb money/retail) which is causing the pinning, smart money already left the game since they adjusted their position on Wed & Thu…. Is that picture correct? If not, could you please explain how you would modify it? Thanks a lot!

    • http://www.aaplpain.com Travis Lewis

      I have an article into seeking alpha right now. Let me get that out. Then go from there.

      • Jeff

        great! looking forward to it – pls let me know when the article is out – thanks!

        • http://www.aaplpain.com Travis Lewis
          • Jeff

            Travis, thanks for the article (very interesting)! ok, and I see your point now: you’re assuming that large funds are selling their options (more or less) unhedged / or just hedged with further OTM long options – but not with stocks. Got it!

            Another Q: You’re stating that 80% or so of last Fridays stock volume was caused by options. it would be interesting to compare the “options volume x delta” (summed over all the strikes) to the stock volume for individual days of the week and check how close both numbers are….

          • http://www.aaplpain.com Travis Lewis

            It comes down to, retailers are out there with buy orders for single calls and puts all day. Someone has to take the other side of that trade and be short those contracts. Retailers don’t have the capital to be selling options, most wouldn’t even have the approval level to do so. Big funds step in to take the other side. Some of these funds may or may not hedge, depending on strategy. But you know when a majority aren’t conventionally hedged cause thats when the stock gets hit or rumors starts flowing.

  • http://www.facebook.com/people/Graciela-Cattarossi/667239856 Graciela Cattarossi

    Travis hi , I am newbie here. so in other words there is 98% chance that apple WONT BE ABOVE 405
    And there is 80 % change that apple will be above 380 but won’t be about 400 ?

    thanks ….
    As far as apple being an illusion on the 400. What you mean?

    I am thinking a week before earnings release is hard for apple not to be at least at 407 . mayor support ? thanks for your input.

    thanks for your time I am trying to learn your way.

    • http://www.aaplpain.com Travis Lewis

      No, no. Those are the stats but using my opinion I have $405 in red. I don’t think this chart shows you anything. Go over to JAJO and thats my take. The options market shows $380- ??? (no top in site as of yet)

  • Anonymous

    Nearly 80k contracts at the $400 strike concerns me. How big a hurdle do you consider this going into earnings? I was hopeful for $410 – $420 pre-earnings. It could still happen. But that upper limit at OPEX is significant. What do you think?

    • http://www.aaplpain.com Travis Lewis

      I put up a video on home page talking about it. I understand if unable to watch as many people prefer written form. To sum it up, $400 calls are an illusion. They don’t bother me, for now at least.

  • Tony

    I have been selling cash secured puts using your site and I was wondering what is your opinion on the best way to get long AAPL before earnings. Based on Asymco and Bullish Cross we are in for a huge earnings report in late January which should produce a big pop in the stock and I agree with them. What strategy would you recommend to capitalize on a big up move? Buying the stock, just keep selling puts based on highest OI or maybe even out of the money puts or is there another suggestion?

    Thanks for the great work on your site

    • http://www.aaplpain.com Travis Lewis

      I would want to get long at current prices. Depends on how much we are talking. I’m going to use a hypothetical $100K. I would get long AAPL in two ways. I would buy something similar to a Jan’13 $200 to $225 LEAP call. Buy 2C. These are $17K each. That’s $34K. The day of earnings I would sell 2 Feb ‘way’ OTM calls against these for income/IV crush only. (lower cost basis, risk free)

      On Monday I would then sell an ITM put — the idea is, I want to be sure I actually get the stock come Friday the 23rd — if I don’t end up with the stock — I want to make so much credit that I come out looking genius. Example, sell the weekly $390 put for $11 credit. If AAPL is under $390 you buy AAPL @ $379 — If AAPL above $390 you just took in $1,100 for 1C in 4.5 days. If think AAPL goes above $390, go up the chain.

      Anyway, say you get the stock @ $379. Now you have 100 shares @ $379 and 2C LEAPS. @ current prices this is a $71.9K holding. You now use the 100 shares to sell your ‘more aggressive’ covered calls, and use your 2C LEAPS to let run uncapped.

      Thats what I do…..You can change up but the gist is aforementioned.

  • Pk22901

    Another idea I have is plotting the change in OI over time (weekly/daily or even hourly). Where would I get automatic hourly/daily information on OI?

    • http://www.aaplpain.com Travis Lewis

      It’s only a daily stat

  • Pk22901

    Travis,

    Do you ever analyze your results relative to high/low volume?

    The last two weeks have averaged exceptionally low volumes of 11.5M shares/day vs 21M shares/day over the last 3 months. The week before this was a very low volume week and this week was too: The two big moving days required a very small increase in volume to move the stock $12: That’s a lot of bang for the buck from the option sellers’ perspective…

    I think low volume would make manipulation tendencies stronger since the players would need to buy/sell low volumes of shares/contracts to win big. I think your charts would have interesting information over time… Perhaps making them 3d with the last x days values explored on the z axis with a simple linear charts of volume in the last x days below it.

    If I wanted to do this, where would I get the historical OI info you’re using here, other than manually checking every day?

    • http://www.aaplpain.com Travis Lewis

      Low volume would make it much easier but also easier to be seen. I personally am not a low volume watcher. I like low volume. I only take notice when we get up in the 30M+ area. I will mess with the charts and try and add some additional info like you have suggested. Anything that’s helps. I only have my historical data base on OI. I’m sure you can get it somewhere although it will be for a heavy fee. To your other post. OI is a 1 time a day thing. It’s not real time. Only volume is real time.

  • Jeff

    Travis, you mention the 9K $420 weeklies being added today are a good indicator for an upward move in aapl. Is your reasoning just based on your past experience or do you have a scenario in mind about the sentiments which drives this change in OI. What, if say the 400′s had increased instead of the 420, thereby rising the wall @400 to surpass? Wouldn’t that be a bearish indicator? What’s your criterium to distinguish bearish form bullish changes in sentiment based on the changes in OI?

    Thanks a lot for keeping your data and insights accessible to everyone!

    • http://www.aaplpain.com Travis Lewis

      I always use the highest OI for the price it “can” get to. This is why I say it’s a good sign. Ultimately Wall St would like to expire AAPL $400 or lower. If this is not possible then they still have all those $420 calls to expire worthless, so not worst case scenario to finish above $400. I have been looking for a run higher so this gives a little more credit to that being possible. On a separate note, your having someone look at the $420 area with 1 week until opex. This may have been a $415/$420 spread, either way someone is looking up at that area as a top (don’t want to go too far into this, get confusing).

      If the $400 had increased and say the $420 sat still. I would consider that “not bullish” as it would create even more resistance for AAPL to overcome. What’s my criteria? Everything depends on what just happened or is happening with the stock/options. Current example is: good sign the call OI is moving up as this gives us room to move up to that point. Say we got to $420 and the call OI doesn’t change anymore but just builds higher and higher at $420. That is bearish sign as the move is done and buyers ran out, options will now push it back down.

  • Gcmaskeri

    Travis,
    Do you keep a track of your take as the OI shifts from one strike to another ? I am particularly interested in the last 2 weeks.
    e.g. Let’s say on Monday the highest OI was 3K each on 400 calls & 380 puts. What was your take on Monday?
    On Tuesday the highest OI shifts to 390 calls & 370 puts. What was your take on Tuesday? Did it shift or remained unchanged? If it shifted – did you make an adjustment to your trade to reflect the shift?

    • http://www.aaplpain.com Travis Lewis

      No I don’t keep track. I just put it up if someone is interested in what I think that day. Regarding the weeklies, they are so short you really need to let the OI build up to like 10K or so to really give support/resistance. By the time that happens it may be Wed or Thursday already. Tha’ts why I say only trade weeklies if you trade for a living. Other than that stick with monthlies. They are more stable.