An unidentified options trader made a bold and lucrative move last Friday, betting millions on a short-term rebound in Apple Inc.’s shares. This bet was set to pay off big time as Apple’s shares soared on Monday following the Trump administration’s decision to grant tariff exclusions for smartphones.
Apple’s shares surged as much as 7% to $212.94 before settling at $206.05, after the announcement that smartphones and other electronics products would be exempt from steep reciprocal tariffs. This news was a significant relief for technology firms like Apple that heavily rely on imports from China.
The sharp increase in Apple’s share price meant that the bullish options trade made on Friday for around $5 million was now valued at approximately $14 million on Monday, representing a gain of 180%.
According to Ophir Gottlieb, CEO of Capital Market Laboratories, Friday’s trade could have been based on speculation about a potential exemption for Apple from tariffs or a positive development regarding China over the weekend. Rumors of such news were circulating during market hours on Friday.
The trade involved the purchase of 35,000 Apple 25, 210-220 call spreads for about $5.25 million when Apple’s shares were trading at $192.69 on Friday. A call spread trade entails buying and selling call options simultaneously.
The strategy behind Friday’s options trade was anticipating Apple’s shares to rise above $210 by April 25, with a maximum potential gain of around $30 million if the shares surpassed $220 by then. This trade was one of the largest in terms of contract volume for individual stock options that day.
After Apple’s shares plummeted by 23% following the tariff announcement, they started to recover late last week as markets rebounded and investors became more optimistic about Apple securing an exemption from tariffs.
Joe Kunkle, founder of OptionsHawk.com, who spotted the trade on Friday, believed it was a play on a China exemption. He stated, “It was just positioning for what most of us knew would happen anyhow.”
In conclusion, the options trader’s savvy move paid off handsomely as Apple’s shares surged on Monday. This story highlights the importance of staying informed and making strategic decisions in the fast-paced world of trading.
