Look at how bullish readings are ramping up

Apple volatility nearly doubled from the August lows, just a huge move in a relatively short time frame, albeit off pathetic levels.

Option buyers were high on the Hog as well, as this Harley Davidson (HDI | Quote | Chart | News | PowerRating) volatility chart demonstrates:

It’s not so odd they would bid up HDI options, given the debacle after the April numbers, but it’s telling that they bid them up even higher than in July, when the pounding was much fresher in everyone’s mind.

On a micro level, a volatility ramp does not necessarily lead to a positive earnings reaction in any individual name. Puts can certainly trade fat and with huge volume, and the stock may tank anyway.

On a macro level however, it’s a short term bullish indicator as it’s a nice contrary signal that fear really is percolating below the surface.

Adam Warner

Adam Warner is a proprietary trader for Addormar Co., Inc., specializing in option and derivative strategies. Prior to Addormar, he was an Equity Options Market Maker on the floor of the American Stock Exchange from 1988-2001.