Content is King Another CHEAP STRADDLE

So far this earnings cycle we have seen big wins in tech out of GOOG, NFLX, and no AMZN.  Flops have come from AAPL, IBM, and MSFT.  Take a look at the pricing of AMZN from today (now up about double the straddle price).


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Is it different this time around?

AAPL and MSFT got a black eye tonight on less than stellar earnings reports.  I think that represents around 20% of the market cap of the NDX.  All those that have been calling for the demise of stocks will have reason to cheer today.  Our rally to all-time highs got derailed by something normal like reduced earnings forecasts instead of Greece, QE or some other macro mess.  While financials and tech have powered us to all-time highs, energy, oil and metals are hitting some near term lows.

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Why Are NFLX Traders Always Wrong

NFLX had earnings today and the stock moved 17.00 dollars, rallying past 115.  The straddle was pricing in a move of less than 10 dollars yesterday.  Hey, surprizes happen...however NFLX has outperformed its earings straddle for 4 straight quarters, ever since they started producing their own content.  Take a look:

earnings_divis_-_nflx_window_screenshot.png LivevolX (r)

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Market still cares about Greece, sort of.

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The morning looked solid today as stock ran on GOOG, FB and AAPL rallies.  Financials look good as BAC is finally getting out from the constant deluge of fines from the financial crisis.  All was going just fine until reports of unrest in Greece started rumbling through the markets.  Treasuries spiked even into Yellen's hawkish rate tones.  Something happened and it had nothing to do with the USA.

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VIX Got ALOT Ahead of Itself

Yesterday we discussed how the VIX might have gotten ahead of itself before the Greek vote.  Considering the IMF statements, ECB, and all of the other Parlitment Reps talking in Greece, there is still SOME doubt that a deal gets done.  Even though the deal will probably be signed,  With SOME doubt the VIX should not have a 12 handle, especially considering China is still floating around.  The market seemed to figure that out today after some premium sellers got ahead of themselves.

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Did the $VIX Get a Little Ahead of Itself?

Greece has a deal,  good or bad, there is some sort of deal.  However it is not a done deal.  The Greek Parliment still needs to approve it, and then alot of other details need to still be worked out.  This might be part of the reason that S&P 500 rallied less than 50 points on the Greek deal over 2 days.  Yet,  the VIX has been utterly hammered. For a tiny rally,  volatility has been completely smashed.  Take a look at the magnitude of the move S&P 500 IV made relative to the actual SPX.

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