Thursday’s Options Alerts
The major indices
continued to sell off today with both the Dow and S&P breaking below support
at their 50-day averages. The tech-heavy Nasdaq took out its 20-day moving
average as well as an uptrend line.
Negative
news from the tech sector was abundant. Late yesterday, Hewlett Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating)
reported first quarter results in line with estimates, but revenues were on the
light side. In addition, the company had some lukewarm comments about the PC
environment. Nortel Network came out with revenue warning, they are also
planning to layoff 7,000 employees. Finally, another brokerage house has
cut their estimates on Intel
(
INTC |
Quote |
Chart |
News |
PowerRating).
At the close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
dropped 130.32 points or 1.47%. The Dow cracked below its 20-day moving average
on an intraday basis, but managed to close just above it. The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
dropped 16.95 points or 1.81%. The index broke below support at its 50-day moving average and
its upward trendline but did manage to bounce off its 20-day moving
average.
The Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) was once again the hardest hit at it
fell 33 points or 2.47%. Although today’s decline was again broad-based,
networking
(
$NWX.X |
Quote |
Chart |
News |
PowerRating) down 6.13%, Internets
(
$DOT.X |
Quote |
Chart |
News |
PowerRating) down 5.06,
semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) down 4.12, and telecoms
(
$XTC.X |
Quote |
Chart |
News |
PowerRating) down
3.42%, were the hardest hit.
The only sector in the green today was REITS
(
$DJR.X |
Quote |
Chart |
News |
PowerRating) up 0.63%. There was no
economic news for today, but tomorrow we have the preliminary numbers for the
second quarter GDP and weekly initial claims.
Volatility shot up in a show of rising fear. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened near
its lows, and closed near the highs of the day. This shift in intraday sentiment
again suggests a rise in fear. A CVR 3 sell signal was triggered today. Although
still early, we’re getting close to oversold levels already. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)
also gapped up, opened near the lows, and closed in the lower half of its
range. This shift
in intraday sentiment also shows a rise in fear. The VXN didn’t trigger any CVRs.
Points of Significance:
Volatility Index |
Close |
Net Change |
Signals/Direction |
% Above/Below 10 Day Moving Average |
Significance |
VIX |
36.23 | UP 3.50 | CVR 3 BUY |
10.93 % Above |
At Extreme |
VXN |
53.52 | UP 3.51 | NONE | 3.86 % Above | Not At Extreme |
Abnormal Options Volume With Price Movement
—
Abnormal options volume (calls and puts) with stock price movement
Name |
Symbol |
Net % Change |
Volume |
Avg. Volume |
| Intermune | ITMN |
+ 25.88 | 13273 | 1520 |
| Neoware Systems | NWRE |
+ 12.16 | 3344 | 171 |
| Best Buy | BBY |
+ 6.84 | 6754 | 3204 |
| Overture Services | OVER |
– 6.33 | 2029 | 700 |
| Valero Energy | VLO |
– 5.39 | 5356 | 970 |
| Safeway | SWY |
– 4.49 | 4423 | 927 |
Stocks With Biggest Spikes in Implied
Volatility — Stocks with biggest increases or decreases in implied
volatility compared to previous day
Spike Up
Name |
Symbol |
IV |
Previous IV |
High IV |
Low IV |
| Province Healthcare | PRV |
82.4 | 63.4 | 58.7 | 40.3 |
| Golden State Bancorp | GSB |
11 | 8.7 | 35.1 | 18.4 |
| TRW | TRW |
27.1 | 22.6 | 42.6 | 14.6 |
| Merrill Lynch | MER |
50 | 43.1 | 61.4 | 32.6 |
| Scientific Atlanta | SFA |
72.8 | 62.8 | 75.9 | 52.8 |
| Ford Motor | F |
55.5 | 49.7 | 61.1 | 31.7 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Intermune | ITMN |
88 | 172.5 | 157.7 | 64.2 |
| Corinthian Colleges | COCO |
50.7 | 61.9 | 76.4 | 35.6 |
| Financial Sector SPDRs | XLF |
23 | 28 | 37 | 13.6 |
| Marshall Industries | MI |
24 | 26.8 | 34.2 | 15.6 |
| Mandalay Bay | MBG |
42.3 | 46.9 | 64.9 | 32.3 |
Please use stops on every trade!