Insuring, Not Betting, in Options

Just when you thought the VIX couldn't get much lower it slipped another 3% to 11.85 and is now back near decade lows. The put/call ratio dipped slightly to 0.54, but what's more interesting is that the dollar weighted put/call index, which gives more emphasis to in-the-money options, has declined dramatically this week. This suggests people are not making as many directionally bearish bets as much as simply keeping some out-of-the-money "disaster insurance" in place.

Mergers and spinoffs contimue to top the headlines in an otherwise quiet news week. Intergraph(INGR Quote - Cramer on INGR - Stock Picks) accepted a $44 per share buyout offer.

Wendy's(WEN Quote - Cramer on WEN - Stock Picks) announced plans to spin off its 83% stake in Tim Horton's(THI Quote - Cramer on THI - Stock Picks) as a $35.36 special stock dividend. To find how all these options will be adjusted, go to the Option Clearing Corp. Web site.

Options' trading volume was led Bristol-Myers Squibb(BMY Quote - Cramer on BMY - Stock Picks), up 5% after winning a court challenge to its Plavix patent.

Shares of Qualcomm(QCOM Quote - Cramer on QCOM - Stock Picks) continue to rebound, gaining another 3% on news that a Federal District court had dismissed Broadcomm's antitrust complaint against the company. The September $37.50 and October $40 strikes were the most active and implied volatility held steady at 38% level.

Today's post-earnings premium crush (PEPC) occurred in Vimpel Communications(VIP Quote - Cramer on VIP - Stock Picks), whose shares shot up 7% and IV dropped 20% following a positive earnings report.

This is not goodbye, just good weekend.