Tuesday’s Options Alerts

• July 8, 2002
• TradingMarkets Editors

After last Wednesday’s dramatic
turnaround and Friday’s monster rally, no follow-through occurred today as the
market was disturbed by the plummeting dollar and accounting worries from Merck
(
MRK |
Quote |
Chart |
News |
PowerRating). The major averages started off the week on a negative note as the
Wall Street Journal reported that Merck
(
MRK |
Quote |
Chart |
News |
PowerRating) failed to collect $12.4
billion from its Medco unit. 

Hearings for former Worlcom
(
WCOME |
Quote |
Chart |
News |
PowerRating) executives
also began today. Worldcom’s executives and former auditor Arthur Andersen put
the blame on each other. President Bush will make a speech on the recent
corporate wrongdoings tomorrow. At the close Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) dropped 104
points or 1.1%, the S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) dropped 12 points or 1.21% while the Nasdaq
was the biggest loser as it dropped 42 points or almost 3%. Gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating)
was the top performer today while tech sectors such as software
(
$GSO.X |
Quote |
Chart |
News |
PowerRating),
semiconductor
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), and Internet
(
$GIN.X |
Quote |
Chart |
News |
PowerRating) were the worst performers.
For more information on today’s action, please refer to
the market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened
near its low and closed slightly below its midpoint. This shift
in intraday sentiment again shows a decrease in fear throughout the day. No
CVR signals were
triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near its lows
and closed near the highs of the day. This shift in intraday sentiment shows an
increase in fear. No CVR signals were triggered by the VXN
either.

Points of Significance:

Retek
(
RTEK |
Quote |
Chart |
News |
PowerRating) dropped 11% on
more than double it average volume.
The company expects to report second quarter earnings in line with estimates, but
warned that third-quarter results will be below previous estimates of 12 cents a
share. Retek now expects third-quarter results of 2 to 4 cents a share. Shares
of Retek are trading in a descending triangle. Although volatility is high, one
way to trade this would be to use a bear spread.

Medimmune
(
MEDI |
Quote |
Chart |
News |
PowerRating) dropped 6% today
giving back all of Friday’s gain. The company is currently awaiting word from
the FDA regarding its nasal flu vaccine which will be out July 10. This could be
a possible straddle play.

Abnormal Options Volume With Price Movement
—
Abnormal options volume (calls and puts) with stock price movement

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
PennzEnergy	PZL	22.1	16.4	43.2	14.8
Ryan Family Steakhouse	RYAN	49.8	40	46.4	32.8
Invitrogen	IVGN	89.9	75.1	67.3	49
Mentor Graphics	MENT	75.8	63.5	64.4	48.1
Coach Inc.	COH	61.8	52.6	58.6	40.6
Federal Signal	FSS	34.1	29.2	33.5	24.3

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
Duke Weeks Realty	DRE	21.8	26.7	25.7	17.7
Manpower	MAN	32.5	39.1	39.3	30.6
Ameripath	PATH	83.2	98.8	90.8	37.5
Wrigley Jr.	WWY	17.1	19.9	21	14.9
Federated Dept. Stores	FD	41.1	46.5	39.2	33.6
Ameren Corp.	AEE	22.4	25.1	23.2	17.1

Please use stops on every trade!