Apple to Release Earnings Later Than Expected
On Wednesday, the implied volatility of Apple (NASDAQ:AAPL) stock fell. The moderation followed news that the tech company would announce fiscal first-quarter financial results on January 27 and not on January 24, as many market watchers had expected. The result was a broad decline in the degree to which investors expected the stock price to swing on January 24.
As an observer, it’s easy to gloss over this development. Market watchers got the date of the earnings release wrong. It happens. No harm, no foul, and there was no harm to most investors. If you deal in options, though — and particularly if you deal in January 24 weeklies — the news hit home. Implied volatility is a huge factor in determining the price of an option, so when volatility changes unexpectedly, so does the price.
Some investors believe options are dubious financial derivatives because things like this happen. Options are double-edged swords, affording those with an appetite for risk the opportunity to speculate, and those who are more intolerant of risk the opportunity to hedge their investments.