The Option Pit VIX Traffic Light Is Yellow: Volatility is likely to move Wildly
Hey Traders,
On Tuesday the S&P 500 should have been up …
But it wasn’t … why?
Because of one stock.
On Tuesday the VIX should have gotten destroyed … but it did not …. why?
Because of one stock …
AAPL.
AAPL was down over 2% on Tuesday.
With it representing 6.5% of the S&P 500 that means that AAPL … by itself cost the SPX 13.715 points.
The S&P 500 was down 6 … you do the math.
So what is going on in AAPL …
It has been the lone holdout of the Big 5 that has been able to hold …
GOOGL … went below the Feb 2020 level, AMZN … same … Meta … um … MSFT … not quite but pretty darn close …
AAPL though, it is a whopping 65 points above its Feb 2020 high …
If you want to know why the S&P 500 hasn’t tanked, the answer is Apple Inc.
But there may be a weakness in the Armor.
AAPL has supply chain and demand issues.
For years traders lamented that AAPL traded at a low P/E … no longer … Its PE is over 23.
AAPL is now back below it 50 DMA
The IV is CHEAP given the up and downs the stock has had and the movement …
People are honed in on the FOMC and non farms this week …
If you want to know what is going to cause the market to truly capitulate …
It’s an AAPL warning on earnings, cash flow, etc ….
And it is coming …
Buy puts on SPX and Puts on VIX in the meantime …
Your Only Option,
Mark Sebastian