Dividends

Turnabout in BWP?

The market is deciding what to do today after making the big volatility crushing run to SPX 1885.52 yesterday.  I can give it a day of rest even for a hyper active bull.  The momentum drivers are a little slower today, so that might be part of it.  Lackluster employment data, of which there seems no end, and other mixed data have us pretty flat so far.

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Not Bullish Call Action but a Div Play

Every quarter around this time, I get a call from at least one or two option mentoring students asking about all the call volume.  "Mark, have you seen all of the call volume going up in the ETF's?"  Then they send me a scan that looks like this:

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LivevolX (R) www.livevol.com

At that point, I call the client and point out where all the volume is coming from.  Take a look at the call volume in SPY today:

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LivevolX (R) www.livevol.com

A stock that acts like a bank and a utility all rolled into one…

I won’t go through the VIX play by play today,because it was pretty straight forward.  The VIX November (and sometime December) future spent a good part of the day underwater, in doing so, showing that the VIX futures were slightly backward.  What does that mean?  Move movement in the short term as 200 point moves in the down start to ignite the realized volatility in the market.  My closet theory is that implied volatility will not drop until after AAPL announces.  I have no real proof for that, but this whole scene feels like last spring when the market was sitting on the big news.  It looks like we are waiting for Friday morning for any meaningful drop in volatility (or another pop), but right now, there is enough movement to support what is going on.&nb

Will AAPL declare a dividend?

 We get questions at Option Pit on a wide range of topics related to options.  After all, that is part of what we are here for.  After the giant earnings release in AAPL last week, I thought it fitting to ponder if AAPL will payout some of that largesse they have squirreled away.  Maybe before looking at what the actual markets think, let’s examine the rule for dividends.

First- Call values do not like dividends and put values do.  A dividend increase will decrease call values and increase put values.

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