Volatility Views 328: Apple Vs. VIX

Volatility Review: A look back at the week from a volatility perspective. Apple and Non-farms are on the radar today. A rough month for equities: 9% Drop - the largest monthly Nasdaq drop since Nov 2008. 7% Drop - largest S&P monthly drop since Sept 2011. Apple screwed the pooch: Apple tumbles 7% after earnings on light guidance. Market cap back below $1T Earnings Highlights from Last Week: Tuesday - GE, Sony, BP, FB, eBay, Pfizer, Coca-Cola Wednesday - GM Thursday - Apple, Starbucks, Weight Watchers, Spotify, Cigna, Dow/DuPont Friday - ExxonMobil, Cboe, Alibaba, Chevron, Berkshire Hathaway Volatility indexes: VIX Cash - 20.5, 6.5-points lower than last show. VVIX - 99, 21-handles lower than last show. VIX Options - ADV: 609k, VIX call/put: 2.4/1, Total 8.24m (5.84m Calls, 2.40m Puts) VXX - 37.5, 3-points lower than last show Volatility Voicemail: Options question of the week: Volatility is all over the place these days. Some say it's too cheap, others say it's too expensive. Either way they want to trade it. What's your weapon of choice when trading the wacky world of volatility? VIX options/futures VXX options/ shares TVIX shares SPX / SPY options Listener questions and comments: Question from Alan Jackson -You guys say to close or roll ahead of VIX expiration to avoid the settlement flimflammery. So when should I do it? The day before settlement? The last hour of the day? A few days before? What's the ideal closing scenario? Question from Numrr - What's your preferred ratio of puts to underlying when trading VXX. Obviously you have to overweight with puts but how much? I like to keep 3 OTM puts on for every share of VXX. That way I'm biased short but also have something in my back pocket for weeks like this. What are your thoughts on that ratio? Crystal Ball: Wild and reckless prognostication Last week: Mark L. - 18.15 Mark S. - 17.25 Guest - 18.50 This week: Mark L. - 18.35 Mark S. - 16.50