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When high volatility is not too high

ATTENTION:  The Options Insider and Option Pit are co-sponsoring a special one day event.  Read about it here.

We have a sleepy market today after 5 years of a not so sleepy market.  The VIX is trolling around the 13 handle and cannot get the gumption to move much either way since stocks have come off all-time highs.

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Short term IV is getting cheap and could get cheaper

For the first time in a long time, there were no market fireworks after the FOMC minutes announcement.  The key thing is that the Fed sees less ominous financial conditions as the pain of the 2008 crash starts to recede in everyone’s memory.  While there have been many head fakes since May, the possibility of Tapering is looking very real.  It is quite possible the new chairwoman will put her stamp on the Fed and start taking away the punchbowl.  The ECB meets next week to discuss the lack of inflation, so it is possible that they pick up the mantle of QE once Mr.

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Flat skew shows the way in FB

While some eyes were on the FOMC meeting today, the VIX only managed a .40 gain on the day.  The market took the FOMC minutes as Tapering could happen sooner rather than later.  With that out of the way, the rest of November is looking quiet again.  Not so for FB after hours.

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AAPL: Butterfly Sellers Lose, Straddle Buyers Get Creamed

ATTENTION:  The Options Insider and Option Pit are co-sponsoring a special one day event.  Read about it here.

There was a good reason for yesterday's strange AAPL skew structure from yesterday:  traders thought AAPL was going to move less than the straddle price.  Take a look at the closing options prices from AAPL yesterday.

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Looking for a pre-earnings play

The market is kind of poking along in an upward fashion.  With most global news ok, there is not a big reason to sell off yet.  The gloomy unemployment reports are keeping the hopes of cheap money alive for the short term.  On Wednesday afternoon, I was running a normal scan getting ready for our Platinum class at Option Pit where we take a deeper dive into specific trades.

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