Monday’s Options Alerts

  • April 19, 2002
  • TradingMarkets Editors

Despite disappointing earnings from Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) yesterday and today
being double witching, market action was tame and range bound.  The Dow had
a modest rally thanks in part to upgrades of Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating), Walt Disney
(
DIS |
Quote |
Chart |
News |
PowerRating), and American Express
(
AXP |
Quote |
Chart |
News |
PowerRating). Meanwhile the S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and
Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) were treading water all day long, with the S&P barely
closing in the green. For more information on today’s action, please refer to
the market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating)
opened near its highs and closed near the lows of the day. This intraday shift in
sentiment
suggests a decrease in fear. No CVR signals were triggered by the VIX today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near the top third of its range and closed just below the
open. This too also suggests a decrease in fear. The VXN did not trigger any CVR signals
either. 

Points of Significance:

Pacificare Health
(
PHSY |
Quote |
Chart |
News |
PowerRating) gained over
20% on five times its average volume. Shares of HMO related stocks
(
$HOM.X |
Quote |
Chart |
News |
PowerRating)
have been on a tear lately. The shares jumped today on the news that they received
a two year extension to its $735 million credit facility. Goldman Sachs also
upgraded the stock to “Market Outperformer” from “Market
Performer”. There is heavy activity in the January 30 calls.

Callaway Golf
(
ELY |
Quote |
Chart |
News |
PowerRating) fell over 11% on
four times its average volume. Yesterday the company reported first quarter
earnings that met expectations but warned on its second quarter earnings.
Callaway now expects to earn between 38 and 48 cents a share compared to
previous estimates of 42 to 49 cents a share. The shares are now breaking down
from a double top. There is heavy activity in the May 17.50 and 20 puts.

Direct Focus
(
DFXI |
Quote |
Chart |
News |
PowerRating) gained over
6.5% on almost four times its average volume. On Wednesday, the fitness product
marketer and manufacturer announced first quarter earnings that beat
expectations and increased 63%. The shares broke out of a quasi ascending
triangle pattern. There is heavy activity in
the May 35 and 40 calls and the July 30 and 45 calls.

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 20.30 DOWN
0.94		 NONE 3.7%
Below		 Not
at Extreme
VXN 39.35 UP
0.01		 NONE 3.68
% 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
Pacificare
Health Systems		 PHSY +
21.76		 2427 539
NetIQ  NTIQ +
11.45		 2106 675
Callaway
Golf		 ELY –
11.14		 2049 380
Metris
Companies		 MXT +
9.33		 14671 6059
Altera ALTR –
8.12		 7344 2644
Direct
Focus		 DFXI +
6.57		 4245 827

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
Hospitality
Properties		 HPT 23.7 17 33 16.2
AK
Steel		 AKS 46.2 36.3 59.4 38.9
Bausch
& Lomb		 BOL 42.8 35.5 42.4 31.3
Wyeth WYE 23.5 19.5 21.6 17.2
Potomac
Electric Power		 POM 20.6 17.5 25.4 15.3
Istar
Financial		 SFI 18.5 16.5 31.1 19.1

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
CSG
Systems		 CSGS 70.8 89.7 71.1 50.8
Andrew
Corp		 ANDW 46.7 58.5 63.7 49.6
Scientific
Atlanta		 SFA 59.7 69.9 72.8 52.8
Cheesecake
Factory		 CAKE 29.4 34.2 55.8 30.6
CINergy CIN 14.1 16.4 31.7 16.9
Compania
Anonima		 VNT 52.2 60.4 93.5 41.1

Please use stops on every trade!