Monday’s Options Alerts

• April 26, 2002
• TradingMarkets Editors

The tough times continued today as a
better-than-expected GDP report failed to spark buying interest. The Dow
closed below the psychological 10K mark for the first time in over two months.
The Nasdaq also fell to a six month low. All major indices closed near their
lows of the day. We are very oversold and we could be due for a bounce. First quarter GDP came in at an
annualized rate of 5.8%, which topped estimates of 5%.  However, the drop
in the University of Michigan’s consumer sentiment index neutralized the
effect of the GDP report. For more information on today’s action, please refer to
the market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating)
opened near its lows and closed near the highs of the day. This intraday shift in
sentiment
suggests an increase in fear. Today’s action in the VIX triggered both a CVR
III and VII buy signals. In addition, the VIX continued to be in overbought territory
which means that the market is getting more oversold.  The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)  opened near the
lows of the range and closed in the top third of its range. This intraday shift in sentiment
also suggests an increase in investors’ fear. No CVR signals were triggered by the
VXN today. However the VXN is also in overbought territory and is close to
setting up a CVR II buy. Overall the jump in fear along with the oversold
conditions could produce a bounce next week.  

Points of Significance:

Despite the weakness in the biotech
sector, Invitrogen
(
IVGN |
Quote |
Chart |
News |
PowerRating) gained almost 10% on over double its average volume. The
stock jumped after it reported first quarter earnings that beat estimates by
five cents. The company also announced the closing of a facility in Huntsville,
Alabama. Shares of Invitrogen are stuck in a trading range after hitting
resistance. There is very heavy
activity in the June 37.50 calls.

Dollar Tree Stores
(
DLTR |
Quote |
Chart |
News |
PowerRating) jumped
10% on four times its average volume. Late yesterday, the company reported first
quarter earnings that doubled from the same period a year ago. The results also
beat estimates by seven cents. Dollar Tree shares gapped up and broke out of its
trading range to a new 52 week high. 

Starbucks
(
SBUX |
Quote |
Chart |
News |
PowerRating) gave back 7% on triple its average volume.
Yesterday the company revealed first quarter earnings that would have beat
estimates by a penny if not for a one time charge to settle a lawsuit. The
company also raised outlook for the year. There is heavy activity in the July 25
calls. 

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

Spike Down

Please use stops on every trade!