The biggest move today was not in the VIX or the SPX. It was in the German bond market where rates roughly doubled to .2% on the German 10-year. That is a big move there with traders jumping into the Euro and out of US Treasuries. Moves like that in the fixed income market tend to dwarf moves in the equity market. Remember the 2008 crash was a debt fueled crash that plunged us into a near depression. The 2001 crash was an equity crash that we quickly bounced out of. It might take awhile for volatility to wind back down so I am going to sit tight on that one for a day or two.
I am a believer that we will see parity dollar vs the Euro sometime in the future. Not anytime in the next 6 months, but eventually. In the near term I think we see the Euro continue to strengthen against the dollar. Sounds like a great bull play with calls. Except the EVZ (the VIX of USD/EUR at over 12% (high for currrency options). Rather than a straight play using Euro Options there is a better play. Take a look at the returns of GVZ (the VIX of GLD) vs the EVZ.
Heading into earings tonight, the market was looking for about a 5.50-6.00 move on AAPL earings tonight. We know its somewhere in that range based on how the weekly strangles were priced at the close on earnings monday vs the prior monday. The math is pretty simple with out all the extra mumbo jumbo.
Earnings Monday (today)
AAPL just posted a big number and the stock is up $2 after rallying a couple of dollars today and many dollars for the week. I guess it is the big number that you have to print that counts. AMZN posted a giant revenue number last week but so far has been able to avoid accountability for actually ma
Starting this week, we will make public our 'Thursday Trade Idea' that we put out at the end of the day. You can watch the video from today's trade on CSX below.
See our Saturday event here
GOOG is about to declare earnings and this is the cheapest I have seen the ATM options in as long as I can remember into a cycle. The key to GOOG is how it trades through the earnings. Most of the time the move in a direction will keep going allowing the ATM the day before earnings to go deep in the money.