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Morning Update

Early this morning the German Courts approved the ESM with the stipulation that German liability to the fund cannot increase without Bundestag approval. The news has sent the Euro and gold higher while Italian and Spanish bond yields have fallen.

Today Apple is expected the unveil the iPhone 5 during a press event kicking off at noon CST. History has shown that Apple stock rallies into the announcement and then sells off the week of before continuing its rally. We have seen this pattern hold true this week. Yesterday we noticed abnormal weekly call option volume in Apple with the majority of volume going off at the ask. This suggests traders are buying weekly call options in anticipation Apple’s stock will head higher into Friday’s expiration. All call strikes from 660 to 680 were active.

Yesterday we also saw an unusually large VIX trade: the Dec. 24 / Nov. 18 strangle was purchased 72,435 times. This trade was part of a roll forward to give the trader long volatility exposure into the end of 2012 as a hedge to a long stock position.

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