Wednesday’s Options Alerts
The major averages started the week off
on a negative note as economic data suggested that consumers are being pinched
by rising prices. Personal income in April rose by 0.3% as expected, however
consumption rose 0.5% or less than the 0.7% expected. Consumer
confidence came in at 109.8, slightly higher higher than the 109.2 estimates.
The expectations index dipped slightly to 109.4 vs. April’s reading of 109.6.
Gold again moved higher hitting another two-and-a-half year high. Volume was again
lackluster as this was the second-lowest trading volume this year. For more information on today’s action, please refer to
the market
recap.
The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up and opened
and closed near the midpoint of its range. There was no significant shift in intraday
sentiment. No CVR signals were triggered
today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near the middle of its range and closed
just below its open. This shift in intraday sentiment suggests a decrease in
fear. Today’s action triggered a CVR
I buy signal.
Points of Significance:
Home Depot
(
HD |
Quote |
Chart |
News |
PowerRating) dropped another 4% on
more than double its average volume. Shares of Home Depot and other retailers
were hit today as Wall Street feared lower consumer spending. Home Depot has
come under pressure lately with competitor Lowe’s
(
LOW |
Quote |
Chart |
News |
PowerRating) knocking on their
doors. Shares of Home Depot were also downgraded to “hold” from UBS
Warburg.
Newmont Mining
(
NEM |
Quote |
Chart |
News |
PowerRating) jumped
4% on heavy volume. Shares of Newmont formed a key reversal bar and hit a new 52
week high. Defensive issues such as gold continue to climb as there is
uncertainty in the market. There is heavy activity in the July 35 calls.
In after-hours action, Novellus
Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating) sold off more than 2% after the company announced that
it expects second-quarter earnings of 8 cents a share, or a penny higher than
estimates.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 22.43 | UP 1.27 |
NONE | 4.23 % Below |
Not At Extreme |
| VXN | 45.11 | UP 2.25 |
CVR I BUY |
2.41 % Below |
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 |
| Endocare | ENDO | – 6.40 |
1416 | 274 |
| Dynegy | DYN | + 4.19 |
12036 | 5693 |
| Home Depot |
HD | – 4.32 |
15915 | 4529 |
| Cephalon | CEPH | + 4.18 |
4939 | 1829 |
| Newmont Mining |
NEM | + 4.37 |
6154 | 1584 |
| NVIDIA | NVDA | – 3.96 |
14101 | 4273 |
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 |
| Fortune Brands |
FO | 21.3 | 18 | 27.3 | 18.5 |
| Puget Sound Energy |
PSD | 26 | 22.2 | 28.7 | 22.3 |
| Legget & Platt |
LEG | 22.1 | 19.5 | 32.2 | 18.2 |
| Istar Financial |
SFI | 24.2 | 21.5 | 31.1 | 16.9 |
| Goldman Sachs |
GS | 34.4 | 31.1 | 40.9 | 27.2 |
| Dell Computer |
DELL | 40.6 | 37.6 | 50.3 | 38.3 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Plum Creek Timber |
PCL | 16.3 | 18.9 | 26.4 | 17 |
| iShares Russel 200 |
IWN | 12 | 13.7 | 20.1 | 12.6 |
| Energy East |
EAS | 21.8 | 24.3 | 31.2 | 23.4 |
| U.S. Biosciences |
UBS | 20.9 | 23.2 | 32.6 | 18.6 |
| Genuine Parts |
GPC | 16.9 | 18.5 | 27.6 | 18.3 |
| TRW Inc. |
TRW | 13.8 | 15 | 37.8 | 14.6 |
Please use stops on every trade!