Friday’s Options Alerts

  • October 10, 2002
  • TradingMarkets Editors

After finishing
lower the last five out of six days, the major averages put in a nice key reversal
bar today. Sparked by Yahoo!
(
YHOO |
Quote |
Chart |
News |
PowerRating) and Aetna’s
(
AET |
Quote |
Chart |
News |
PowerRating) positive
earnings forecasts, as well as the better-than-expected initial claims numbers,
stocks put in a broad-based rally. 

At the
close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) reclaimed yesterday’s losses and jumped 247.68 points or
3.39%. The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) gained 27.18 points or 3.49% and the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) gained
49.38 points or 4.43%. Utilities
(
$UTY.X |
Quote |
Chart |
News |
PowerRating) up 8.61%, Internets
(
$INX.X |
Quote |
Chart |
News |
PowerRating)
up 8.53%, and semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) up 6.15% were
the top sectors of the day. Meanwhile gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) down 1.50% and health
providers
(
$RXH.X |
Quote |
Chart |
News |
PowerRating) down 0.17% were the only sectors in the red today.

On
the economic front, jobless claims fell 40,000 to a two-month low of 384,000.
Economists were looking for claims to come in at 408,000. Also, wholesale
inventories ticked up 0.2% while sales jumped 0.9% in August. With
volume rising and breadth improving, today’s action was very positive. But
whether this is the start of something big or just another one day wonder will
remain to be seen. If this is the start of something, there’ll be pullback opportunities
along the way, but if you wish to play this now, do what Joe Corona said and use
ratio call spreads.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened near its high and closed near the lows of the day. This shift in intraday sentiment shows a
drop in fear.
Today’s action triggered CVR
1 and 6 buy signals. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened near the
highs of its range and closed near its lows. This shift
in intraday sentiment also shows a drop in fear.

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 46.29
 		DOWN 3.19
 		CVR
1 & 6 Buy

 1.91% Above
 		Not
At Extreme
VXN 62.82
 		UP 0.44
 		CVR
1 Buy

 4.93% Above
 		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
Household International
 		HI

 + 25.23
 		14016
 		2193
American
Electric
 		AEP

 + 19.84
 		13827
 		1222
Andrx Corp.
 		ADRX

 + 13.28
 		30963
 		5710
Overture
 		OVER

 + 12.45
 		4825
 		990
Hollywood Entertainment
 		HLYW

 + 12.23
 		773
 		115
Biogen
 		BGEN

 + 8.48
 		21376
 		3812

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

Omnicare

OMC

 57.3
 		45
 		51.4
 		28.4
Tricon Global Restarurants
 		YUM

 55.8
 		44.8
 		45.4
 		23.6
Public Service Enterprises
 		PEG

 73.5
 		60
 		44.8
 		15.3
Talisman Energy
 		TLM

 57.4
 		47.2
 		38.7
 		31.3
Progress Energy
 		PGN

 56.1
 		48.1
 		33.8
 		14.5
Talbots
 		TLB

 64.9
 		54.3
 		55.4
 		35.1

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV

iStar Financial

SFI

 26.5
 		51.1
 		36.1
 		16.9
Texas Utilities
 		TXU

 105.3
 		127.2
 		61.6
 		17.3
Engelhard Corp.
 		EC

 41.2
 		35.5
 		35.5
 		26.7
First Data Corp.
 		FDC

 56.2
 		66.6
 		64.8
 		28.6
Yahoo!
 		YHOO

 72.2
 		85.2
 		92.2
 		61.1
Renaissance Learning
 		RLRN

 62.6
 		73.8
 		71.6
 		34


Please use stops on every trade!