Sea of Red! NASDAQ Drops 5% As AAPL Nosedives 8% (125 Strike AAPL Calls Drop 89%!)

by confoundedinterest17

Do you remember a sea of red?

Well, the Dow plunged 2.78% today while the NASDAQ dropped 5%.

Losses in benchmark indexes were brutal enough, getting to 6% in the Nasdaq 100, or about $730 billion erased. In single-stock equity contracts they were downright existential, with some instruments wiped out in the space of a few hours. Volumes in puts and especially calls has been exploding in recent weeks, much of it in the tiny lot sizes denoting individual traders.

While it’s never hard to pick out staggering losses in options when markets tumble, and plenty of examples exist of well-timed puts, today’s losses were particularly harrowing for the longs. A call with a $125 strike price on Apple Inc. shares, expiring tomorrow, plunged 89% as shares sank 8% to $121. A bullish wager for Tesla Inc. to reach $500 by Friday’s expiry lost 90% as the stock dropped 9% to $407. And a call on Zoom Video Communications Inc. with a strike price of $420 became essentially worthless as shares hit $381.

Now that is a steep AAPL vol surface!