Wednesday’s Options Alerts

• February 11, 2003
• Chris Tyler

In Tuesday’s trade the VIX and
VXN finished slightly down on the session, with no signals being triggered as of
the close of trade. Bin Laden stole the
show today, as he made a guest appearance on the Mr. Al show. It was a mixed bag
with the ETFs today, as the DIAs and SPYs both finished lower, while the QQQs
put in a small fractional gain. The one common element that binds the three at
this moment would be that all are currently below price supports with buyers
nowhere to be found (there might actually be more sightings of Bin Laden than
that of equity buyers). 

Volume has been tepid, and with volatility in the
VIX contracting above prior resistance, it looks as though we could be in store
for lower prices. In my opinion that’s what it feels like the market is asking
for, and with this being very much a news driven market, prices and the market
outlook could change very quickly. In the short term, as I’ve emphasized
recently in the Daytraders Report, it looks like the path of least resistance is
down, so neutral to bearish option plays out of contra rallies look to be the
play du jour. 

I’ll leave off today with what I believe is the
best piece of advice I can give you, and that would be the quote, “staying
spread, is staying alive”. I’d also like to extend my apologies for the
lack of fresh content the past week  as some extracurricular projects
within the site have unfortunately taken precedence. A Thursday night edition
will wrap up this week, and hopefully next week we will be back to our regularly
scheduled line up.

Points of Significance:

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	37.27	Down -.43	        None	1.74% Above	Not at Extreme
VXN	46.70	Down -.62	        NoneÂ	0% Above	Not at Extreme

 

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
Wellpoint HealthÂ	WLP	       -4%	7400	1927
SAP Aktiengesell	SAP	       +1%	5232	897

 

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
JDA Software	JDAS	69	64	98	55.5
Progress Energy	PGN	31.5	28	55	12
Texas Utilities	TXU	54.6	48.3	115	17

 

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
J2 Global	JCOM	72	79	88	78

 

Please use stops on every trade!