VIX Closes Down as Equities Rebound

The VIX closes lower by $0.76, at $26.70, after an early morning spike to $28.92, on the Durable Goods Order.
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Stocks managed to pull off a win with a late-day rally. The Dow Jones Industrial Average ended up 19.61 points, or 0.20%, to close at 10,060. The S&P 500 gained 3.46 points, or 0.33%, to close at 1055, and the Nasdaq was up 17.78 points, or 0.84%, to finish at 2141.

The CBOE Volatility IndexI:VIX closed lower by $0.76, at $26.70, after an early morning spike to $28.92, on the Durable Goods Order. U.S. stocks and oil rose this afternoon due to speculation that this month's sell off was overdone on fears of a slowdown of the economic recovery. VIX call volume of 76,000 contracts compares to put volume of 64,000 contracts, with the majority of the volume in September. The VIX continues to trade above its 100 and 50-day moving averages, suggesting the momentum for higher prices are still on trader's minds.

SPDR S&P 500 ETF (SPY) - Get Report spreaders were selling August premium and hedging with the purchase of September volatility, hoping for the markets to remain steady into August weekly expiration on August 27. The SPDRs closed up $0.41, at 105.94. SPY calls traded 760,000 contracts, verses 1.16 million puts. August put option implied volatility is at 31 September is at 26, October is 28 and November at 29, suggesting larger price movement in outer months.

The PowerShares QQQ Trust (QQQQ) closed up $0.42, at $44.07. QQQQ call option volume of 222,000 call contracts, compares to 228,000 puts. QQQQ August put option implied volatility is at 31, September is at 28, October is at 29 and December is at 31. The implied volatility is above its 26-week average of 26, suggesting larger outer month price movement. QQQQ's shares price closed $1.61 below its 200-day moving average, suggesting traders expect larger downside price movement.

The iShares Russell 2000 ETF (IWM) - Get Report closed up $0.90 to $60.53. IWM call option volume of 150,000 contracts compares to put volume of 360,000 contracts. August weekly put option implied volatility is at 41, September is at 32, October is at 35 and November is at 38. This is above its 26-week average of 27, suggesting larger outer month price movement.

Apollo Group (APOL) closed up $1.61, at $43.10 and traded 2.5x its average daily volume. APOL sold off last week after the Department of Education released data showing loan repayment rates at college campuses run by for-profit education companies. APOL September volatility is at 53, November is at 57, above its 26-week average of 50. Call option volume of 3,700 contracts compares to put volume of 29,300 contracts, suggesting traders are purchasing puts to protect downside price movement.

Apple (AAPL) - Get Report closed up $2.96, at $242.89. AAPL is expected to announce the first iPod touch with a back facing camera for still images and videos in September. Call option volume of 155,000 contracts compares to put volume of 107,000 contracts. AAPL has support at its 200-day moving average of $231.00.

Looking ahead to Thursday, traders will be focused on the Jobless Claims report due out at 8:30 a.m. EDT. Consensus expectations are for 495,000 claims, and the range is for 475,000-510,000 claims. The EIA Natural Gas report is due out at 10:30 a.m. EDT. Notable companies reporting tomorrow include: Aruba Networks (ARUN) , J. Crew (JCG) , Novell (NOVL) and Royal Bank of Canada (RY) - Get Report.

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