Option Block 378: Market Apocalypse Redux

Trading Block: A crazy time in the markets today - the biggest rally of the year, sparked by the Fed minutes, followed by one of the worst down days. VIX Cash back up over 19. Icahn - Apple trading at half value.

Odd Block: Put spreads trade in AECOM Technology Corp (ACM), puts trade in Babcock and Wilcox Co. (BWC), and puts trade in Frontier Communications Corp. (FTR)

Mail Block: Listener questions and comments

• Question from Larry Sanders - Hey crew minus the Viceroy. Do you ever think we will see a tradeable skew product? Something like the CBOE Skew Index but as a real product? Does that even make sense?
• Comment from Lawrence Silverberg - Hi Mark. Thanks for reading my bond question. I heard it today. Your discussion was very helpful. I have some research to do now. Uncle Mike and Andrews input were very helpful. Like you said advice of what not to do is also helpful. I liked the idea of far OTM puts are good bankruptcy protection. My bond portfolio is at Merrill and I think you and I know more about options than my financial planner. Thank you very much for reading my question. Larry.
• Question from Tim - Futures and options are both leveraged instruments. So trading an option on a future is like using leverage to trade an already leveraged instrument. How is that legal? Did they not crack down on something similar with options on levered ETFs? Are you not essentially trading a derivative of a derivative at that point? Does this not call into question the entire futures options market?
• Question from Jim - Dear editor, I like your programs, but have been wondering why the recordings are not made available the same day? Listening something a day late with today’s actual market results dramatically reduces your programs relevance."

Around the Block: Will the freefall continue? What about the Fed schism? Laser focus on the S&P. Watch for volatility creep.