Here’s one that’s sure to bring in some angry e-mail from both the Apple acolytes and the vol. sellers.
It could very well be that if Apple’s latest iPhone rollout continues to disappoint, the subsequent pressure on the stock price imperils the low vol. regime.
Does that sound crazy to you? It shouldn’t. In fact, it’s almost tautological.
“When the P/E of the biggest company in the index declines, that usually means that the stock price declines, putting downward pressure on the index and upward pressure on vol.,” Bloomberg’s Cameron Crise writes on Monday.
Have a look at a chart of the rolling correlation between Apple’s P/E and the VIX:
So if you’re short vol., maybe take some of your ‘vol’uminous profits and go buy an iPhone. Or better yet, buy five or six.
Just think of it as an investment in your future.