By Philip Elmer-DeWitt
August 8, 2011

Strike prices range from $335 to $400 as traders scramble to deal with a market in free fall

A hedge-fund trader hoping to make some quick money in Apple AAPL weekly options would be hard-pressed to make sense of the chart at right, a snapshot of  thinkorswim.com‘s AAPL options board taken at 10:30 a.m. Monday morning.

The bottom two graphs show open interest in Apple weekly calls (left) and puts (right) as of last Friday evening, pointing to a close this Friday within a Max Pain range of $370 to $39o.

The top two graphs, showing the trading volumes Monday morning, draw a very different picture. With Apple topping the list of the most active equity option families in the first 30 minutes of trading — followed by CitiBank C , Bank of America BAC and General Electric GE , according to Fly on the Wall — the top charts show an unusually disordered market with prices scrambled all over the lot.

The volume of calls (left) and puts (right) show traders placing large bets that Apple won’t trade below as $335 per share before weeks end or as high as $400, although many of those outliers are likely to be part of complex trading strategies used by institutions to minimize downside and upside risk.

Apple opened Monday at $361.38, down $12.24 (3.4%) from Friday’s close.

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