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A few weeks ago I wrote an article noting how the CBOE Apple VIX Index (VXAPL) had soared, even though Apple (NASDAQ:AAPL) was on the rise. The Apple VIX is just like the regular VIX, except it tracks the implied volatility of just this one stock. Normally, you'd expect the opposite, that implied volatility would rise as the stock fell, and vice versa.

Here's the chart I posted on March 16:

click to enlarge

Note how while the stock was up from around 567 to 585 over the two day time period, the implied volatility had spiked all the way up to 42%. The volatility environment is different now. Here's a comparison of the Apple VIX to AAPL over the last four days or so.

You can see how volatility is gradually drifting down, even as the stock had pulled back from around $606 on March 21 to near $595 by March 23. And that's even after the market "glitch" that impacted the stock on Friday. This is kind of the opposite of what we saw earlier in the month when the Apple VIX was rising even as the stock made new highs.

That fall in volatility represents a lot of value coming out of Apple options. For example, at the close of March 20 with AAPL at $605.96 an April 605 call would have cost you $25.60. As of Monday's close, with AAPL at $606.98 that same call would be worth only $18.50.

Yes, there was about 5 days of time decay, but that doesn't account for the nearly 18% plunge in the value of those calls given that the stock is virtually unchanged.

Here's a longer term chart of the Apple VIX from Bloomberg:

I would say normally we can expect Apple's mean 30-day implied volatility to fall into the high 20s, however, we're only about 30 days from the company's next earnings announcement, so it certainly wouldn't be unusual to see implied volatility to go back into the 40s.

So we're kind of in no man's land now. I wouldn't be buying or selling AAPL options (except weeklys, which are another animal altogether) until volatility either goes down a lot, or up a lot.

Source: Apple VIX Drops, Options Plunge