So I sold this straddle for an average price of $3.70 and watched the elephant on a rope. It could break free any time and head off in another direction. Around 3:30 I bought it back.

Apple (AAPL) was pinned to the 150 strike by 10:14 and stayed there for three hours before taking off to end at 151.75. When I noticed that it was pinned around noon, the 150 straddle was selling for about $0.80 which I thought was too tight.

Bank of America (BAC) never strayed very far from the 13 strike, but the straddle would have been too tight also.

Look at Mastercard (MA), it is all contained between 179.50 and 181. Wish I had looked this morning.

While I tend to shy away from talking too much about intraday moves in the VIX, today has been an unusual day in the VIX.

First, for most Fridays and particularly before long weekends, you should expect the VIX to be (a little more than 1.0%) lower than usual due to what I refer to as calendar reversion, when options are repriced with the assumption of lower volatility in advance of several non-trading days.

As I type this the VIX is almost flat, while all the major indices are in the green.

What is particularly interesting, however,

is how the VIX since about 1:00 p.m. ET. In the one minute intraday chart below, note the steady rise in the VIX over the course of the last hour or so, while the SPX has essentially moved sideways.

The action in the VIX could portend a rocky last hour or two or perhaps indicate that traders are becoming more concerned about holding long positions over the holiday weekend. Keep an eye on the VIX – and the weakness in real estate (IYR) and financials (XLF).

The peak in the chart at the start of the day corresponds to the low in the SPX. The market was at a loss around 10 AM today.

In fact, the market dropped 1% in the last half hour to end the day nearly flat.

With the collapse of the market in November 2008, strong companies like Vornado (VNO) were paying out seven to eight percent. Simon Property Group (SPG) another strong company, was paying out similarly. We discussed income stocks briefly in a previous post on dividend payers.

Now credit is tight, even for good companies with strong assets.  If a REIT needs money, they can sell a building or shopping mall.  The problem is that real estate values are low now so the trusts don’t want to sell.

In December the IRS ruled that REITs could pay up to 90% of their required dividend payments in stock.  Vornado announced in January that it would pay 60% of its dividend in stock, and last week Simon Property Group said that they would pay 90% of its dividend in stock.

This is theft.

If they are paying in stock, they are not paying.

Think of the stock of a company as a cake.  Say you cut the cake into twenty slices and give everyone at the party a piece. Then each person at the party has 1/20th of the cake.  If instead, this works well with three year olds, you cut the cake into 40 pieces and give everyone one piece, you have given out half the cake.  After a half hour, you give everyone a dividend, another piece of cake.  They have had two pieces of cake, but still only 1/20th of the cake.  The dividend gave them nothing extra.

In the same way, if a company has 100 shares of stock held by the public and it gives a “dividend” of 10 shares,  it has just reduced the size of each share by ten percent because it has divided up the company into ten percent more shares.

Avoid REITs.