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Market Volatility Bulletin: Vol Tumbles As Markets Ignore Trade Woes

The Balance of Trade profile picture
The Balance of Trade


  • Spot VIX nears an eleven-handle as markets celebrate Apple's major milestone.
  • Have share repurchases made up a large proportion of EPS growth over the last decade or so?
  • With earnings season wrapping up, SVXY looks primed to reach new highs since the Feb. 5 wipeout.

Market Intro

CNBC: Thursday Close

Apple (AAPL) led US equities (SPY, DIA, QQQ, IWM) in Thursday's trading session as investors celebrated the milestone of the first US company to reach a $1T market capitalization. Congratulations, Apple! S&P vol took a beating as trade continued, after having opened quite a bit higher on trade concerns that were ultimately brushed aside.

MarketChameleon.com: AAPL implied vol

Post-earnings vol dumped hard on Apple shares. Interested parties looking for more upside on this highly valued company may decide to participate with relatively inexpensive options. As we'll see later, Apple as a single stock has about the same level of vol as the NASDAQ at present.

Not even a Treasury announcement that the size of debt auctions would be rising was enough to give gold (GLD) a respite. The yellow metal trades near seven-year lows, yet implied vol is just north of 11.

Thoughts on Volatility

It was a reasonably tight race to the $1T mark. And it begets a question: which (if any) of the other contenders ((GOOG, GOOGL), AMZN, MSFT) will cross the line as well? The earnings and revenue growth for these firms are impressive to say the least. What does this titanic-cap (pardon the pun) phenomenon portend for risk assets and volatility? I think much of that depends on correlations between the assets.

UrbanCarmel posted this tweet showing that only 3% of all EPS growth came from buybacks. This is a little tricky of a statement; however, as the JPMorgan figure really only looks at net buybacks (or buyback issuance).

Closer examination reveals that when we do not net, buybacks have made up a very great deal of EPS growth (maybe 50%). If you consider this to be an interesting or important topic, then there really are a couple different perspectives one may take on this

This article was written by

The Balance of Trade profile picture
Adam Zingg, CFA offers both practical and theoretical perspectives that will benefit readers who wish to learn more about how to execute  on views or strategies that interest them.  Whatever your overarching philosophy or expertise, I believe there is value in understanding how trading works. This is perhaps especially true for investors, who often take a more philosophical, less mechanical view when it comes to their processes. It is not my goal to:1) convince you which side of the market to be on2) establish your trading time frames3) have you directly follow any specific trade ideasInstead, I aim to demonstrate how complicated sounding ideas can be simplified and accessible.  My hope is to grow your tool kit of resources, and give you healthy confidence to execute your own personalized strategy.  Trading and investment are fascinating, applicable across a wide variety of fields and disciplines.  Greater focus on targeting, execution, and exit strategies build transferable life skills.  In reading my work, it is my goal that you will consistently glean useful insights and build skills that enhance your ability to trade and make important decisions.

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I actively trade the futures and options markets, potentially taking multiple positions on any given day, both long and short. I also hold a more traditional portfolio of stocks and bonds that I do not "trade". I do believe the S&P 500 is priced for poor forward-looking returns over a long timeframe, and so my trading activity centers around a negative delta for hedging purposes.

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