Frequent readers of TME know we have written extensively on using options to enhance yield, especially for people that "must be long a certain name".

Apple has been one of those. OnSeptember 1, Apple ATH close, we wrote:

"The point is not trying to guess the top in Apple, but from a risk management point of view Apple overwriting strategies make a lot of sense.

Retail armyhas been buying tech calls en masse, leaving dealers short gamma. Since the FAANGs have exploded, short gamma dealers have found themselves in a lot of trouble, chasing deltas higher, and at the same time seeing vols explode making "real hedging" even more expensive.

Dealers tend to be reluctant to buy back higher vols as they have a big belief in their "theoretical" models. Since volatility is mean reverting, dealers tend to sell more and more volatility as "it must revert".

In the meantime, retail army buys more and more options, dealers chase deltas higher and higher etc. Of course, the same works on the way down, but inversely. When the stock goes through the strikes on the way down (if ever) all those chased long deltas must be sold again.

We can write a book about the above "dynamics", but the main point is, Apple vols have exploded due to the above, and anyone that is getting a bit "nervous" about their Apple longs, but must be long, should look at overwriting strategies here."

Big fish vs small fish...

Things are not trading well, but there is no real panic in this move lower.

VIX actually closed higher two days ago, but more importantly the VIX 2/8 mths spread has not shot up much higher during this sell off like we have seen it explode during the past "hiccups".

Demand for short term VIX futures is not overly extreme.

The spread is elevated, but there is not the panic bid for vol.

Do not dismiss tech's longer term "duration" risk...

US 30 yr inverted vs QQQ.