Apollo Global Management (APO) had no news yesterday suggesting investor interest in its stock.
Apollo's share volume on the day was nearly half its 30-day average; however, its options volume was almost 10 times its 30-day average. Not surprisingly, Apollo exhibited unusually active options in Wednesday's Trading.
There were three options with volume-to-open interest (Vol/OI) ratios well above the minimum of 1.24.
While the Jan. 16/2026 $185 call had a whopping Vol/OI ratio of 349.27, making it the busiest of the day among all options, I will focus on the other two—one call and one put—in today's commentary. Unless I'm missing something, the put and call appear set up for a long strangle.
The question is whether APO stock is worth owning at this time.
Apollo Missed the Cut
If you're a sports fan, you're likely aware that the NFL voted earlier this week to allow private Equity Funds to own up to 10% of an NFL team. In fact, they can own up to 10% of six if they desire.
The NFL watched as other leagues allowed Private Equity investors to buy into their leagues. It made sense for the world's most successful professional League to do the same, albeit at a more conservative 10%.
The NFL chose three individual firms, Sixth Street, Arctos, and Ares Management (ARES), to be the initial investors should any of the 32 teams wish to sell 10% of their team. A fourth is a consortium of several firms, including Blackstone (BX), Carlyle Group (CG), CVC Capital Partners, Dynasty Equity, and Ludis Capital, led by former New York Jet running back Curtis Martin.
Perhaps the unusual options activity was spurred by investors speculating that the NFL would soon add Apollo to the list of prospective investors. After all, Apollo finished the second quarter with total assets under management of nearly $700 billion, making it bigger than most of the firms on the NFL’s initial list, except for Blackstone, the world’s largest alternative asset manager.
I think it's a fair argument that Apollo should have made the cut. Of course, it’s very possible that Apollo management doesn't see the point. It's valid, indeed.
I will say this about the $185 call expiring in 507 days: the ask price of $2 is just a 1.1% down payment on the strike, so if you argue that Apollo will join the party, it's a no-brainer.
With a delta of $0.11845, the share price only has to appreciate by $16.88 (x=15%) for you to double your money by selling the call before it expires.
I’ll get to the long strangle in the third section. Next, I’ll talk about Apollo’s business. Apollo Is the 4th Largest Alternative Asset Manager
According to Investing in the Web, Apollo is the fourth-largest alternative asset manager in the world, behind only Hamilton Lane (HLNE), Brookfield (BN), and Blackstone. It’s a player, for sure.
In January 2022, Apollo completed its $11 billion all-stock transaction to buy Athene, one of the world's largest providers of annuities and other retirement services. Apollo first invested in Athene at its inception in 2009, increasing its ownership to 35% in October 2019 and finally buying the remaining 65% 20 months ago.
Since then, its assets on its balance sheet have grown 11-fold, its revenues five-fold, and its operating income has doubled. As of June 30, it had $522 billion in fee-generating AUM, 45% higher than $360 billion at the end of 2021, before the merger.
In every respect, it’s a bigger and arguably better business.
According to Barchart data, 13 of the 18 analysts covering its stock rate it a buy (4.39 out of 5), with a $126 target price, 10 higher than its current price. It currently trades at 17 times its 2024 earnings estimate of $6.68 a share and 13.7 times its 2025 estimate of $8.30.
If it’s not a value play, it’s most certainly fair value at current prices.
The Long Strangle Is Alive
A long strangle is when you buy a call and put out of the money with the same expiration date, but the put strike price is lower than the call strike price. The upside is unlimited, while the downside is the cost of the long strangle.
Now, I’ll be the first to admit that the $185 call discussed in the introduction is the unusually active option I originally wanted to cover. I’m still new to options, so this is the first strangle I’ve ever recommended; I’m usually a one-option guy.
However, this jumped out at me for whatever reason. I’m generally bullish about Apollo’s business and prospects. The long strangle is often intended for situations where investors think the share price will move considerably but are unsure about the direction of the move.
I don’t necessarily think that APO stock is about to undergo a massive correction or liftoff, but it is compelling.
The total cost of the strangle, Based on yesterday's close, the total cost of the strangle s $525. That’s your cost if the shares stay between $100 and $130 until expiration. If you hold to expiration, you make money below $94.75 and above $135.25.
You can make money by selling one of the options before expiration without it being in the money. However, that likelihood diminishes as each day passes.
Alternatively, if you’re bullish about APO but don’t think its stock will move much over the next four months, you could buy 100 shares at current prices and sell the call, generating $245 income in the process.
That’s all for now.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
