Thursday’s Options Alerts

  • January 22, 2003
  • Chris Tyler

Wednesday made it five in a
row for the ETFs.  The sayings
“easy come, easy go” and “what goes up, must come down” come
to mind as the SPYs and DIAs both tested 84% Fibonacci retracements from the
late December lows (so close that you can taste it). General Dynamics, Merrill
Lynch, Schlumberger, Eastman Kodak, to name a few, were responsible in part for
the markets price behavior. But let us not forget that Wall Street’s favorite
whipping boy, Saddam Hussein is ever lurking, and always ready to be deployed by
our own media whenever the occasion seems to fit.

Volatility picked up on the session in both the
(
$VIX |
Quote |
Chart |
News |
PowerRating) and the
(
$VXN |
Quote |
Chart |
News |
PowerRating). That’s a good sign, along with the fact that the VIX is looking
extended, as it triggers a CVR III buy signal. As the ETFs and many equities
have at the same time extended their losses to numerous support levels, we are
close to what looks like a playable long. 

Yesterday I talked about the use of verticals,
which is still a good idea in either direction, but we might also be looking for
opportunities to sell some premium in issues that have spiked, and have shown
technical merit for confirmation upon position entry. 

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 32.10 Up
+1.57		         
CVR III 		 13.03%
Above 		At
An
Extreme
VXN 44.32 Up +1.08       
 None  		 2.24% 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
First
Data Corp 
FDC		       
-5%		 5783 1091
Amgen
AMGN		        +3% 37069 17859
Target
TGT		       
-2%		 24363 3629

 

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
Stanley
Works
SWK		 41 37.3 43.2 27.2

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
JDA
Software
JDAS		 62.4 81.5 98 55.4
Boston
Scientific		 BSX 31.3 36.1 57.1 36.4
Pinnacle
Systems		 PCLE 55 60.4 85.2 58.2

 

Please use stops on every trade!