Monday’s Option Alerts

• January 10, 2003
• Chris Tyler

With the volatility indices
still testing established support levels on the daily charts, but
price and pattern in the market ETFs showing a bullish bias, one has to focus on
opportunities, and not opinion. Two of the three ETFs closed essentially flat
after potentially bad news out of North Korea, and a worrisome employment report
rocked the averages in the early going. The QQQs though were able to actually
close at their best levels in over a month. The markets are speaking volumes
right now. Prices rising, or brushing off bad news. Sound familiar? Its the sign
that the institutions are buying, ending our first full week of the new year in
positive territory. 

The cynic in me can’t believe how quickly the
markets can reverse, and after what was essentially a one day pullback, go on to
close near the highs of the week. But the cynic in me (my opinion) will not
prevent me from trading off opportunities that are available. Volume is picking
up, prices are acting constructive on negative news, and if you don’t buy it for
a second, the market is letting you hedge yourself with what has to be
considered cheap implied volatilities. 

 Both
the
(
$VIX |
Quote |
Chart |
News |
PowerRating) and the
(
$VXN |
Quote |
Chart |
News |
PowerRating) finished
mixed on the session. The VIX closed up slightly, with no CVR signals for this
evening. The VXN closed down about 2%, and has a CVR VI sell attached to it.

For additional color commentary and related
options insights
please click on TM’s Nightly Daytrader’s Report as yours truly writes both features for TM. And as always
let price and volume be your guide through the markets. Have a good night. 

Points of Significance:

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	27.13	Up +.24	         None	7.2% Below	Not At Extreme
VXN	42.28	Down -.72	          CVR VI	5.59% Below	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
Dell ComputerÂ	DELL	       -4%	49250	23569
Semiconductor HOLDRs	SMH	       +2%	62064	13093
Symantec	SYMC	       +2%	7932	2564

 

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
BB&T Corp	BBT	20.7	18.8	36.8	15.4
Cheesecake Factory	CAKE	42.2	37.6	52.3	30.6
Cardinal Health	CAH	42.1	37.7	59.5	23.9

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
Comverse Technology	CMVT	53.2	63.6	86.8	58.4
Panera Bread Co.	PNRA	34.7	39.1	64	38.5
AmdocsLimited	DOX	64	70	107	49.2

 

Please use stops on every trade!