Kersplat goes the implied volatility in FB now what to do?

We have spent a lot of time in this blog chronicling the movement in Facebook.  I think the stock has been a really good trader except of course for the $38 buyers on the IPO.  It feels like nobody wanted the stock at $19 either because all the initial investors were getting out.  Some did for sure as was reported today but by and large there is a big group of holders not quite ready to hit the bricks yet.  The lockup expiration dates have been the great buying opportunities of the year for this name.  I guess the point is that when things are telegraphed t

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AAPL Earnings Straddle is Really Juicy

We all know that AAPL has had a rough couple of months.  The stock has moved up and down 200.00 in the last 6 months.  The company has earnings next week and I wanted to put into perspective how much the fear is priced into options right now.  Take a look at this chart of AAPL stock and IV.


Livevol (r) www.livevol.com

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I liked the special title there for our blog tonight.  For the most part the activity in the volatility markets was pretty muted today.  On balance some decent earnings but nothing to light a candle under the big indexes.  The NDX was up about .33% so the CES show was not exactly lighting a candle under the technology stocks.  I was reading a column in the WSJ not so long ago that the next technology innovations won’t be enough to spur economic growth or some sort of nonsense like that.  Some professor was espousing this idea and it reminds me of a quote from the head of the US Patent Offic

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Special Telegram

The market got a bit of a relief rally today. The hurricane was manageable and the employment picture was a bit brighter according to ADP so we had a very pleasant rally.  Today was the first real smack down in volatility since the day before GOOG reported underwhelming numbers a couple of weeks ago.  Anytime the VIX drops near 2 points it is a big readjustment in the volatility perception.  Even with the election looming it won’t make much difference for the market if today’s IV markdown was any indication. 

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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 lo

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Was the IBM moved priced in?

One of the frequent questions we take in the daily pit report during earnings season is if premium is a sale into the earnings announcement.  Usually we take these on a case by case basis, but one of the best ways to evaluate this is by taking the front month options and turning them into a pure play on the event.

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Bidding for the Banks

Today we had the rally that never was.  On the face of it, the US keeps getting glimmers of good news (jobs), and the Europeans keep getting bad ones (Spain downgraded).  What does get the market going is hope of central bank intervention.  Spain gets downgraded, and they will have to go to the ECB and then the crisis is solved, or that is how the market sees it.  How do the banks see it?  After all, they have vested interest in the flow of money in the US and abroad?

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The VIX down and the market did what…..

One of the most interesting things about market sentiment is how strange it is.  After nearly a year of hanging on the hopes and aspirations of the Greek peninsula the market has forgotten what to do with good old fashioned news.  The Beige Book was on the whole positive.  Earnings reports on balance for some retailers were a little better than expected.  The market looked at the news and went south.  Good news can’t get us to rally so things are back to normal.  Hmm…. So what is up?

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Trading vs. Investing Using Options HPQ Revisited

The jobs market can breathe a sigh of relief today knowing that the unemployment rate dropped .3 of a percent  to 7.8%.  I am trying to remember the last time the percentage drop was that big, but it was quite an achievement considering the jobs numbers have been pretty anemic for months.  For sure it has not happened in the last year (see my chart).  My only guess is the employers were relieved that the Euro Crisis was solved and got hiring.  I hope this is the start of a great trend, but of course, we will have to wait f

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Is HPQ toast?

The market spent most of the day trying to decide if the ADP payroll report was going to be a good or bad precursor for the NFP number on Friday.  I could almost see the tug-of-war going on between the yes and no camps all day long.  One stock where the future was not in doubt was Hewlett Packard (HPQ ).  The market hated it, and the name was down 13+%.

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