Friday’s Option Alerts

• February 13, 2003
• Chris Tyler

As promised, an early edition
of the options report, and I’ll I can say is, “can I time it or
what?”. Today’s report coincides
with a nice technical bounce off of price supports in two of the three ETFs. The
SPYs traded all the way down to the 78% Fibonacci support level before tailing
higher, along with the DIAs and QQQs, to establish bullish candlestick patterns
known as hammers. A very appropriate name for what has been happening as of late
in the marketplace.

I would expect to see something more than the
half session technical bounce we witnessed this afternoon. With no real catalyst
concerning the geopolitical environment to spark the rally, today’s bounce can
be classified as a short covering rally, with some institutional nibbling thrown
in. Can you blame them? The mood has been dour to say the least, and fear has
definitely been evident the past couple of sessions, but not the type one would
normally associate with a true bottom. 

I’ve been wrong before, and certainly I’ll be
wrong again, but the one thing I do know is that  if I use disciplined
trading tactics such as staying spread, then I’ll definitely be staying alive in
this market, regardless if the animal spotted is a bull or bear.

As stated, fear has been seen hanging out in the
markets the past couple of days, we just wish he would do his best grim reaper
and get it over with. At the moment the dynamic duo, the VIX and VXN are
registering one buy signal apiece as we close the day’s session in potential
bounce mode off technical supports. The VIX is still in consolidation mode above
prior supports after testing range highs, while the VXN, which rallied 6% on the
session continues to play catch up with its more popular sibling.

Points of Significance:

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	38.45	Down -.65	       CVR I Buy	3.05% Above	Not at Extreme
VXN	51	Up +3.50	       CVR V Buy	6.30% 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
Home DepotÂ	HD	       -2%	38724	16273
Qualcomm	QCOM	       -7%	63539	19449
Cardinal Health	CAH	       -1%	12787	4270
Gilead Sciences	GILD	       -4%	5028	2081

 

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
Barr Labs	BRL	40	35	57	30
Convergys	CVG	48	43	62	33.4
Jacobs Engineering	JEC	36	32.5	43.7	30
Tier Technologies	TIER	58.5	53.2	64	45.3

 

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
Cognizant Technology	CTSH	40	45.5	75	45.5

 

Please use stops on every trade!