Why is AAPL usually up on Mondays?

Ever notice how AAPL almost always closes higher on Mondays? Take a look at the Friday and Monday closes from February to mid May of 2014.

Weekday Date Open Close Difference Percent
Fri 9-May-14 584.54 585.54    
Mon 5-May-14 590.14 600.96 8.38 1.394
Fri 2-May-14 592.34 592.58    
Mon 28-Apr-14 572.8 594.09 22.15 3.728
Fri 25-Apr-14 564.53 571.94    
Mon 21-Apr-14 525.34 531.17 6.23 1.173
Mon 14-Apr-14 521.9 521.68 2.07 0.397
Fri 11-Apr-14 519 519.61    
Mon 7-Apr-14 528.02 523.47 -8.35 -1.595
Fri 4-Apr-14 539.81 531.82    
Mon 31-Mar-14 539.23 536.74 -0.12 -0.022
Fri 28-Mar-14 538.32 536.86    
Mon 24-Mar-14 538.42 539.19 6.32 1.172
Fri 21-Mar-14 531.93 532.87    
Mon 17-Mar-14 527.7 526.74 2.05 0.389
Fri 14-Mar-14 528.79 524.69    
Mon 10-Mar-14 528.36 530.92 0.48 0.090
Fri 7-Mar-14 531.09 530.44    
Mon 3-Mar-14 523.42 527.76 1.52 0.288
Fri 28-Feb-14 529.08 526.24    
Mon 24-Feb-14 523.15 527.55 2.3 0.436
Fri 21-Feb-14 532.79 525.25    
Fri 14-Feb-14 542.47 543.99    
Mon 10-Feb-14 518.66 528.99 9.31 1.760
Fri 7-Feb-14 521.38 519.68    

I have to give credit to Travis Sago at aaplpain.com for pointing this out. Travis goes on to propose a theory as to why AAPL behaves this way. It can be summarized as the tail (weekly options) wagging the dog (stock price).

Weekly options are generally opened at the beginning of the week. For AAPL the pattern indicates that is Monday. Consider the following chain of events.

  1. Retail investors purchase weekly option contracts on Monday.
  2. The AAPL market maker (MM) Goldman Sachs writes these options as a function of making a market.
  3. The MM now has a short position that will result in losses if the stock goes up.
  4. The MM buys shares of AAPL stock to offset the short option position.
  5. The stock price moves up on Monday.

Then consider this chain of events on Friday.

  1. Retail investors close out weekly option contracts on Friday.
  2. The MM no longer has a short option position.
  3. The MM sells the long stock position balancing the options.
  4. The MM buys shares of AAPL stock to offset the short option position.
  5. The stock price moves down on Friday.

This is very similar to max pain theory. Both rely on the MM buying and selling stock to offset an option position. It is important to note that more call options are purchased every week compared to put options. This means the overall option position of the MM is short.

The reason Travis focuses on AAPL is because it trades more weekly options than any other stock.

What does this mean for you? It simply means you can buy AAPL at the close on Friday and sell AAPL at the close on Monday and statistically have more gains than losses. It also means tht you are holding AAPL for a very short amount of time and thus reduce risk.


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