(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Apple Inc. (AAPL) shares have slumped since the company unveiled its highly-anticipated iPhone 8 and iPhone X, with no positive surprises at the September 12 event. Last week, Investopedia noted that the options market was pricing in a potential rise in Apple shares to $177 by the October 20 expiration. (See: Apple Will Surge on iPhone 8, Options Trades.) One week later, those expectations have diminished, which suggests it may take longer for shares to rise.

AAPL Price Chart

AAPL Price data by YCharts

Expectations Fall

On September 5, we noted that the options market was pricing in a move of 6.5 percent based on the $165 straddle set to expire on October 20. Since the Apple event on September 12, Apple shares have fallen by roughly 2.5 percent from its intraday high to about $159. Because the options are trading below the current price, the value of the calls have dropped considerably, while the puts have risen, and the implied volatility has fallen by three percentage points, to 19.5 percent.

(Interactive Brokers)

With the stock trading at $159, the $160 long straddles suggest the options market is now only looking for a 5 percent move in the price of Apple by October 20, with the calls trading at $3.55 and the puts trading at $4.15. This suggests that the excitement of the new iPhones is already dissipating. But this shift in sentiment also likely has to do with the timing of the release date of the new phones. The iPhone 8 and iPhone 8 Plus are being released on September 22, and iPhone X release comes on November 3.

Taking Longer To Get There

Going out to expiration for December 15, the $160 straddles suggest the market is pricing in a move of 9 percent, based on the calls trading at about $6.80 and the puts trading at roughly $7.80. The implied volatility is high for the $160 strikes at 23 percent, versus the S&P 500's implied volatility of 10 percent.

Additionally, the calls are still heavily favored for the $160 strike price, nearly 5 to 1, with 16,000 contracts open on the calls. The $165 calls show 26,000 contracts open and have a breakeven price of roughly $170, based on a price of $4.80. The $155 puts have only 5,000 contracts open and a break-even price of about $150 based on the puts trading at $5.40.

(Interactive Brokers)

The options market seems to be still looking for the price of Apple to rise, but because of the iPhone release date, it would appear it has pushed the timing out, but also lowered its expectations for how high the shares could rise. Of course, none of this could matter once the results of phone sales start coming in, with the options market repricing things all over again.

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.