JLN Options: Options market sees big earnings move for Apple

Apr 24, 2012

Lead Stories

Options market sees big earnings move for Apple(Reuters) – The wild ride in Apple shares this year could get even more interesting when the company reports quarterly results after the bell on Tuesday.
Judging by trade in the options market, investors expect Apple shares to jump or fall by about 7.5 percent, a much greater swing than the average post-earnings move of about 4.25 percent in the past four quarters.
Apple shares have experienced wild swings since touching an all-time high of $644 on April 10. The stock closed down 0.2 percent at $571.70 on Monday, but is up about 41 percent for the year.
QQQ Options: A Bearish View On Apple
By Brendan Conway
For once, the contrarian Apple (AAPL) trade is to be bullish. With hours to go until the iPad maker’s quarterly earnings report, the stock is down 2.1% at $559.72. But here’s an even more vivid sign. The PowerShares QQQ‘s (QQQ) equity options are the most bearish-looking in nearly six years, says Dow Jones Newswires’ Kaitlyn Kiernan: Worries about a postearnings Apple (AAPL) slump is spreading. Options activity in the PowerShares QQQ (QQQ) ETF, which tracks the Nasdaq 100, hits the most-bearish level in nearly five years ahead of AAPL’s F2Q report.

Volatility Returns to Markets
Matt Krantz, HispanicBusiness.com
Stocks are returning to their wild and crazy days, jolting investors to attention after lulling them with a surprisingly tranquil start to the year.
The Dow Jones industrial average sank 102 points to 12,927 on Monday, the seventh session in the past 13 trading days that the market measure has posted a triple-digit point move. It’s a startling change from the eerily quiet trading days in the first quarter of the year.

What’s New with the VIX?
Recent moves in the VIX are nothing exceptional
InvestorPlace By Tyler Craig, Tyler’s Trading
Since reaching a new 52-week low just south of 14 last month, the CBOE Volatility Index (VIX) has risen as high as 21 and as of midday Tuesday was sitting around 19. A short-term pop from 14 to 19 would typically be noteworthy and something most option traders would look to fade.
However, it’s been over a month since hammering out the lows at 14 and the VIX has been hanging around 19 for a couple weeks so it’s not as if we’re overextended here. It’s also worth noting the rise in the VIX hasn’t occurred in a vacuum. Over the same time frame, the actual movements of the S&P 500 Index (SPX) — as measured by both average true range (ATR) and historical volatility — have lifted a fair amount. The ATR is up from $12 to $16.50 and the 21-day historical volatility (HV) is up from 10% to 14% (see the attached chart).

TABB Group Announces Strategic Alliance with Singapore-based AsiaEx
Capital Markets Firm Expands Research and Consulting Services across Asia
NEW YORK, LONDON & SINGAPORE, Apr 24, 2012 (BUSINESS WIRE) — TABB Group announced today that it is expanding its research and strategic advisory services to financial firms across the Asia-Pacific (APAC) region through an exclusive strategic alliance with AsiaEx Consulting Pte Ltd. Based in Singapore, AsiaEx is led by capital markets industry veteran Chris Price.


Orc releases Gateway Development Kit for building custom connectivity
Demonstrates open Orc architecture with new toolset that facilitates custom development of connectivity solutions and systems integration.
Stockholm, SWEDEN – Tuesday, April 24, 2012 – Orc Group (SSE: ORC), the leading provider of technology and services for the global financial industry, today announced the Gateway Development Kit that enables Orc customers to build custom connectivity to exchanges, brokers, in-house order management systems and market data systems or vendors.
The connectivity provided through the Gateway Development Kit is integrated with the Orc Trading products. This provides Orc’s customers with the ability to expand their use and reach of their current Orc Trading installation. The Gateway Development Kit product is available in two versions, FIX and native. The FIX version allows for easy integration with brokers and in-house order management systems. The native version is available for latency sensitive trading business and also supports market data integration.http://jlne.ws/Jw0Yh3


Another Way To Play Gold: Buying Volatility
By Brendan Conway, Barrons.com
Volatility is creeping higher across all kinds of asset classes lately, and so is traders’ best guess for future market swings — what the options market calls this the “implied volatility.” But matters are somewhat different for the SPDR Gold Trust (GLD) and the iShares Silver Trust (SLV), notes Barclays Capital’s Maneesh Deshpande this week. The apparent complacency in precious metals may create short-term opportunities: Specifically, in the high-risk, high-reward act of trading volatility.

Buy Put Options to Protect Against Correlated Losses
By STEVEN M. SEARS, Barrons.com
As distant macro factors move stocks in sync, buy puts to hedge against lockstep losses.
Correlation, the tendency that strips stocks of their individuality, has returned as macroeconomic and political forces once again are driving risk-asset markets.  As European nations seem to be losing the political will to address their economic troubles, correlation is quietly but persistently rising, which could spell big trouble for investors. Already, investors are turning to the options market to hedge portfolios. (See Striking Price, “Put European Risk Away from U.S. Stocks.”)

A super contango in fear
FT Alphaville
This is a guest post for FT Alphaville by Theo Casey, a columnist at Futures & Options World, blogging on the back of FOW’s European Equity Options conference in Amsterdam.
The year is 2017.
Bank of England governor Sir Gordon Brown hints at a ninth round of QE. Implementation of president Herman Cain’s “999” tax policy sees US debt downgraded by Western ratings agencies. And scientists warn the hole in the ozone layer has widened as a consequence of the Swiss National Bank burning its abundance of now obsolete euros. It’d be nice to hedge one’s stocks against these very serious risks.

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