Wednesday’s Options Alerts…

• December 11, 2001
• TradingMarkets Editors

As expected, the Federal Reserve lowered the federal
funds rate by 25 basis points to 1.75%. This is the eleventh rate cut of the
year and the federal funds rate is now at a 40-year low. The Fed also signaled that
it will cut rates further if the economy doesn’t soon improve. Tech
stocks continued to be strong as the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) gained almost 10
points to close back above the psychologically important 2000 level. However,
the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) and the S&P
(
$SPX |
Quote |
Chart |
News |
PowerRating) closed lower after Merck’s
(
MRK |
Quote |
Chart |
News |
PowerRating)
announcement that it sees no earnings growth in 2002. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened
near the highs of its range and closed slightly below it. This intraday shift in sentiment
suggests that fear is crawling back up. No CVR signals were
triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened right on the high of its range and closed
near the midpoint. This intraday shift in sentiment is also telling us that fear is
increasing.
The VXN did not trigger any CVR signals either.

Points of Significance:

InterVoice Brite
(
INTV |
Quote |
Chart |
News |
PowerRating) dropped 25% on over
10 times its average trading volume today after the company warned that it
expects to post breakeven results for their third quarter. Analysts were
expecting a profit of 7 cents per share. The company cited “a very difficult global business
environment.” InterVoice did manage
to find support near its 50-day moving average. Its options activity was heavy
as it traded over eight times its average contract volume. There is heavy
activity in the December 12.50 and 15 calls. Shares of WWF action figure maker,
JAKKS Pacific
(
JAKK |
Quote |
Chart |
News |
PowerRating) stumbled 15% today on five times their average trading
volume after they received a downgrade based on valuation. The stock
has doubled since its September lows, but it has dropped more 26% this week.
Double Click
(
DCLK |
Quote |
Chart |
News |
PowerRating) jumped over 12% today on
almost triple its average trading volume. The stock jumped today as an industry
report revealed that consumers are shifting away from catalog purchasing and
moving towards online purchasing. Double Click’s options traded over four times
their average volume. Remec
(
REMC |
Quote |
Chart |
News |
PowerRating) gapped lower, but then bounced off its
200-day moving average today as a United States District Court dismissed a class-action lawsuit against them.
In addition, its implied volatility has gone to a new low. This suggests that its
options are cheap and that volatility could revert to its mean.

Abnormal Options Volume With Price Movement
— Abnormal options volume (calls and puts) with stock price movement.

Stocks With Biggest Spikes in Implied
Volatility — Stocks with biggest increases or decreases in implied
volatility compared to previous day.

Spike Up

Spike Down

Please use stops on every trade!