Thursday’s Options Alerts

  • April 16, 2003
  • Chris Tyler

Wednesday’s ‘box of
chocolates’ came up empty after unwrapped.
Coca-Cola fizzled any attempts at a rally
this morning, as inspiring earnings reports out of the likes of JP Morgan,
Intel, and Linear Technologies, to name a few, were not enough to keep positive
traction for the market averages. Heavier volume on wide range bars down have
two of the ETFs notching distribution of about 2% on the session. The third, the
QQQs were held to about the unchanged mark on semiconductor strength out of
Intel and Texas Instruments.

Was there a trade to save the position? I’m
referring to my achilles heel, which although a pain, does show that even in a
difficult market, if the position is managed properly can show positive results.
Depending on how aggressively managed, will show drastically different results
in a market that has essentially churned since first talked about in this
column. Since April 7th, there has been very little in the way of market follow
through. On a closing basis we are down about a quarter of a point in the
Diamonds, in the underlying. Yikes!! If scalping off of Haggerty reversals, and
using our price support and resistance levels, then its not nearly as scary.
Today for instance, with a conservative 10 to 15 deltas assigned against the
calls, a short in the DIAs on the 10:35 bar at 84.05 (this is a 1,2,3 entry)
after failing below resistance (unfortunately the market never even gave life to
the calls above 85) was a potential play. This is not without risk, nothing is,
but it is a solid set up within the confines of a well defined trading plan. It
also happened to be the last reversal entry for you “haggo” disciples
out there, until maybe the 12:55 bar, and a full .50 lower…as I said yesterday
“what doesn’t kill you only makes you stronger”, could also be
followed up by “no harm, no foul”. We didn’t get the chance to stay
ahead in this example, but it does go to show good reason for always staying
spread.

I’ll say it again, volatility levels as measured by the VIX
continue to play “stupid human tricks”. The price action is stretching
the bands as it tests Year-To-Date lows, and is once more giving off multiple CVR
signals. Gamma ramma time is once again at hand.

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 26.09 Up
.05		      
CVR 1,2,3,6 SELL		 11.01%
Below 		 At Extreme
VXN 37.05 Up
.55		        
CVR 2,6 SELL		 7.77%
Below
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
Amdocs 
DOX		        +15% 1687 392
Semiconductor HOLDRs
SMH		        +5% 74819 19886
IDEC Pharmaceuticals
IDPH		        -4% 11011 4712

 

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
University
of Phoenix
UOPX		 46 40 75.6 42
3M
MMM		 25.4 23.1 43.3 22.2

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
CDW
Computers
CDWC		 46 51.4 68.5 44.1
Intel
INTC		 41.7 46.2 74 39.2

Please use stops on every trade!