Apple’s stock is as good as gold, right? Perhaps, but that doesn’t mean that it’s value can’t be manipulated. Writing for Fortune, Philip Elmer-DeWitt makes a shocking accusation: Apple’s share price is being manipulated by a mysterious cabal who are “pinning” the stock below its strike price and no one seems to be doing anything about it.
As proof, Elmer-DeWitt offers this recent trading example, which he describes as a “sickeningly familiar turn of events, one that has its own language and terms of art.”
It was 3:48 p.m. on Friday April 29 and traders who had purchased Apple (AAPL) April 29 $350 “calls” — options that gave them the right to buy Apple shares in blocks of 100 for $350 per share — were sitting pretty. The stock was trading around $353.50 and those calls were worth more $350 apiece (the difference between the price of the stock and the so-called “strike price” of the option times 100).
Then, in an extraordinary burst of trading — exacerbated by the rebalancing of the NASDAQ-100 scheduled for the following Monday — more than 15 million shares changed hands and the stock dropped below the $350 strike price just before the closing bell. Result: The value of those calls disappeared like a puff of smoke.
Elmer-DeWitt then goes on to show using a number of graphs and charts that historically, the pattern in which Apple’s stocks have tended to fall recently indicate illegal manipulation.
“How is this manipulation being accomplished? Who is doing it? And why aren’t they being punished?” Elmer-DeWitt asks.
Frankly, I just don’t know enough about the stock market to answer those questions, or even if Elmer-DeWitt is right… but if he is, this is a story that’s about to blow up.
We’ll keep our eye on it, but in the mean time, we’d love to hear the perspective of more learned minds than ours in the comments. What do you think?
