Tuesday’s Options Alerts
Stocks came back
after an early morning plunge. Things
looked grim on this last trading day of the third quarter as worse-than-expected
Chicago Purchasing Managers index and negative news from General Electric
(
GE |
Quote |
Chart |
News |
PowerRating),
Wal-Mart
(
WMT |
Quote |
Chart |
News |
PowerRating), and Walgreen
(
WAG |
Quote |
Chart |
News |
PowerRating) helped the Dow and Nasdaq to take out
their July lows.
However, a early afternoon rally took the averages well off
their lows, though the major averages did put in the worst third-quarter
performance since the crash of 1987.
At the
close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) dropped 109.87 points or 1.42% after falling over
240 points earlier in the session. Before reversing, the
index fell to levels not seen since October of 1998. The
S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) fell 12.11or 1.46% — managing to shed about
half off their losses by the close. Finally, the Nasdaq fell 27.25 points or
2.27%.
Internets
(
$INX.X |
Quote |
Chart |
News |
PowerRating) down 5.72%, retail
(
$RLX.X |
Quote |
Chart |
News |
PowerRating) down 4.16%,
and semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) down 3.38% were the weakest sectors today.
Winning sectors were gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) up 1.64%, biotechs
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) up
0.82%, and airliners
(
$XAL.X |
Quote |
Chart |
News |
PowerRating) up 0.53%.
On the economic front, both
personal income and spending for August rose 0.4% and 0.3%. respectively. This
was below estimates calling for a rise of 0.5% and 0.6%. However it was the September
Chicago Purchasing Managers index that did stocks in. The index fell to 48.1%
from August’s reading of 54.9% and significantly below expectations of 53.3%.
Tomorrow we have the September
ISM numbers on tap.
The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened near the midpoint of its range and closed
slightly under its open. This shift in intraday sentiment
shows a drop in fear. A CVR I buy signal was triggered today.
The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) also
gapped up, opened
near its midpoint and closed slightly below its open. This shift
in intraday sentiment shows a drop in fear. However, the Vixen didn’t
trigger any CVRs. Although the intraday reversal was positive, volatility
still remains quite high for outright option purchases. Vertical spreads would
be a better choice if you wish to speculate on the long side.
Points of Significance:
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 44.66 | UP 1.52 | CVR I BUY |
3.57% Above | Not At Extreme |
| VXN | 59.09 | UP 1.23 | NONE |
0.004% Below | Not At Extreme |
Abnormal Options Volume With Price Movement
—
Abnormal options volume (calls and puts) with stock price movement
| Name | Symbol | Net % Change |
Volume | Avg. Volume |
| Walgreen | WAG |
– 9.23 | 9657 | 1664 |
| eBay | EBAY |
– 8.15 | 25876 | 10717 |
| CVS Corp. | CVS |
– 7.44 | 2683 | 348 |
| Overture | OVER |
+ 7.02 | 2559 | 767 |
| Computer Sciences | CSC |
+ 6.76 | 1659 | 240 |
| Abercrombie & Fitch |
ANF |
– 7.21 | 4599 | 441 |
Stocks With Biggest Spikes in Implied
Volatility — Stocks with biggest increases or decreases in implied
volatility compared to previous day
Spike Up
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
|
Walgreen
|
WAG |
45.6 | 36.8 | 45.3 | 19.4 |
| Bunge Limited | BG |
42.2 | 35.1 | 45.3 | 24.1 |
| Big Lots | BLI |
52 | 44.4 | 57.4 | 33.6 |
| Hotels.com | ROOM |
61.7 | 52.8 | 71.4 | 50.6 |
| Inter-Tel | INTL |
74.1 | 63.8 | 73.1 | 50.9 |
| J.C. Penny | JCP |
63.9 | 55.3 | 71.8 | 42.3 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Golden State Bancorp | GSB |
13.9 | 18.2 | 35.1 | 10.3 |
| Stericycle | SRCL |
44.6 | 49.7 | 73.1 | 37 |
| Household International | HI |
70.8 | 78.6 | 80.1 | 30 |
| Pinnancle West Capital | PNW |
49.7 | 54.8 | 46.8 | 16.7 |
Please use stops on every trade!