| NEW YORK, Sept 3
NEW YORK, Sept 3 Apple Inc shares were
on track Wednesday for their worst day since January ahead of
the launch of its newest iPhone, with at least one brokerage
mulling a stock downgrade unless its new products show better
promise for profit growth.
Shares of the smartphone maker slumped 4 percent - its worst
percentage drop since late-January - as Apple faced scrutiny of
its security systems after photos of celebrities stored in
individual iCloud accounts were leaked online.
The stock lost $3.57 to $99.15, with 87 million shares
changing hands, already exceeding its 50-day moving average of
45.8 million shares traded daily and putting it on track for one
of its busiest days of the year.
In a note Wednesday, Pacific Crest Securities analyst
Andy Hargreaves said it was time to take profit in Apple ahead
of the phone launch, scheduled for Sept. 9.
"Unless next week's event details massive incremental profit
opportunities, we are likely to downgrade (Apple's) rating," he
Some saw the decline as a reaction to Samsung Electronics
Co's introduction of its own large-screen
Apple said photos of celebrities, including Oscar winner
Jennifer Lawrence and swimsuit model Kate Upton, that were
leaked online were done through the targeting of individual
iCloud accounts, and not through a breach of Apple systems.
The leak has put Apple's security in the spotlight just days
before it is due to launch its highly anticipated iPhone6.
Still, even with the stock's drop, activity in the options
market points to bullishness ahead of the iPhone launch.
Options volumes are currently 10 percent higher than normal.
The last two weeks saw bullish call bets outnumbering
bearish puts by a ratio of about 7 to 3, according to Credit
Suisse data, but on Wednesday, calls and puts were about even.
"Despite the recent events, I am still very bullish on Apple
as they have a number of new products coming out such as
wearables and a new bigger iPad," said Naeem Aslam, chief market
analyst at Dublin, Ireland-based Ava Trade.
Apple straddles that expire Sept. 19 are pricing in a 3.9
percent move in either direction by that date, said Ed Tom,
managing director of equity derivatives trading strategy team at
Credit Suisse in New York.
About 31,000 calls at the $104 strike and about 62,000 calls
at the $107 strike, both expiring on Sept. 12, traded on
Wednesday, said Brian Overby, senior options analyst at online
brokerage TradeKing in Charlotte, North Carolina.
"That was a bullish trade and it is the closest expiration
(following the Apple event)," Overby said.
(Editing by Bernadette Baum)