Trading in Apple Inc
Overall option volume on Apple was running 2.2 times the daily average with 554,000 calls and 256,000 puts on the tape with less than an hour left in trading on Tuesday afternoon, according to options analytics firm Trade Alert.
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In addition to his stake, Icahn tweeted that he discussed increasing Apple's buyback program with Chief Executive Officer Tim Cook.
Following Icahn's comments, Apple shares
"Icahn gave a vote of confidence that Apple is being undervalued in his opinion but also gave a strong vote of confidence to the current management team," said J.J. Kinahan, chief strategist at TD Ameritrade.
"Apple shares are getting near the $500 mark which could help it become a darling of the day traders once again."
The most active options contracts were the front-month $480, $475 and $470 strikes which were now all in-the-money, said WhatsTrading.com options strategist Frederic Ruffy. Heavy trading was also seen in the $500 strike, according to Thomson Reuters data.
"A lot of the focus is in the short-dated August calls that expire at the end of this week as traders are apparently using calls to speculate on additional gains," Ruffy said.
Once the most valuable company in the world, Apple's stock price has hovered between $400 and $450 for months, after dropping from record high of around $705 in September 2012. The stock is down about 8 percent for the year.