As covered yesterday, there’s at least one blue-chip stock that investors should avoid given its history of dismal performances in the month of August. Today, we want to focus on one stock that could turn in big gains by the month’s end: Apple Inc. (NASDAQ:AAPL). The equity is fresh off an upbeat earnings report that garnered a slew of bull notes. Though the security recently pulled back from its July 15, all-time high of $150, there’s plenty of upside for AAPL as it enters a historically bullish month.
According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, over the last 10 years, Apple stock has been one of the best stocks to own in August. The security is one of just three technology hardware and equipment names on White’s list of the 25 best S&P 500 stocks to own this month, and boasts an average return of 6.6%, with 70% of the returns positive.
A move of similar magnitude from AAPL’s current perch of $147.22 would put the equity at $156.94 — well above its aforementioned record peak. On the charts, the stock has so far added 34.4% year-over-year, and turned in a monthly loss just once over the last five months. And while Apple stock has suffered its fair share of pullbacks over the last year, the 200-day moving average managed to catch two major dips in the first half of 2021, and remains a well established trendline of support.
Shorts are already beginning to build their positions, and there is still plenty of pessimism left to be unwound. Short interest rose 6.8% in the most recent reporting period, and the 96.36 million shares sold short make up a massive 29.6% of AAPL’s available float.
Meanwhile, the options pits are extremely optimistic, with calls ruling the roost. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity’s 50-day call/put volume ratio of 3.82 sits higher than all other readings from the past year. In other words, long calls are being picked up at a faster-than-usual clip.
Now looks to be a good time to bet on the equity’s next moves with options. This is per Apple stock’s Schaeffer’s Volatility Index (SVI) of 20%, which sits in the low 13th percentile of its annual range. In simpler terms, options players are pricing in relatively low volatility expectations right now. What’s more, the security’s Schaeffer’s Volatility Scorecard (SVS) sits at a high 98 out of 100, meaning AAPL has exceeded option traders’ volatility expectations during the past year.