Wednesday’s Option Alerts

• March 18, 2003
• Chris Tyler

Was today the calm before the
storm? Time will tell of course, but
with the indices establishing another leg higher since we last left off, today’s
consolidation type activities gave plenty of opportunity to batten down the
hatches, or pull in the sails a bit. The ETFs all traded in a very narrow range
establishing doji like patterns, up at the farthest reaches of resistance, on
relatively heavy volume compared to the 50-Day moving average. This action
occurred on above average (50-Day moving average) trade, but lighter volume than
witnessed during the past three sessions.

Admittedly, the market usually goes further in
both directions than I ever give it credit for. This has been one of those
instances. When the ducks are quacking so to speak…..well needless to say, but
I will anyway, my DIA spread that I established last week, while beautifully
executed is not looking exceptional these days. The 75-78-81 butterfly was put
on for a total debit of .05. That’s the good part, the most I can lose per
contract is 5 bucks. The frustrating part was the lack of opportunity to trade
around it when traffic continues to go the other way. No regrets, and not a bad
bet, because staying spread means staying alive, and there’s always tomorrow.

The VIX has done very little the past two
sessions. We’ve pretty much stayed the course, with a little chop throw in,
within our dear friend the trading range. The VXN on the otherhand, did
establish a higher high today before reversing to close within its prior range
in a tail like formation. This action has it triggering two buy signals.

Points of Significance:

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	35.78	Down -.68	       NONE	2.1% Below	Not at Extreme
VXN	48.02	Up + 1.35	       CVR I,V	3.6% Above	Not at Extreme

 

Due to time constraints this
evening, the following lists do not contain end of day data, as they were
constructed during the final hour of trade.

 

Abnormal Options Volume — This list
includes both percentage movers that are normally associated with an increase in
options activity, as well as stocks that have unusually high activity and / or
technical situations,
reflecting increased speculation of a potential price move.

Name	Symbol	Net % Change	Volume	Avg. Volume
AltriaÂ	MO	       -5%	84169	24258
Netflix	NFLX	       +4%	1100	331
American International	AIG	       -2%	52969	16861

 

Stocks With Spikes in Implied
Volatility — Stocks with Increases and Decreases in implied
volatility compared to previous day. Candidates are then screened qualitatively.
These lists represent those issues that carry a blend of liquidity and/or
technical setups that might deserve further notice. 

Spike Up

Name	Symbol	IV	Previous IV	High IV	Low IV
Biomet	BMET	36	30.6	57.4	31.3
Apollo	APOL	37.3	33	58.3	31.6

 

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
Gtech Holdings	GTK	36.4	40.2	70	30
Garmin	GRMN	34	37.4	51.6	29

Please use stops on every trade!