Monday’s Options Alerts…

• October 26, 2001
• TradingMarkets Editors

Stocks ended mixed today as the tech-laden Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
headed lower after JDS Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating) reported a steeper than expected
loss for the quarter. JDS also announced that they expect sales to continue to
slow. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) and S&P 500
(
$SPX |
Quote |
Chart |
News |
PowerRating) were up for most of the trading
session and ended the day with modest gains.

Today the VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) once
again opened near the top of its range and closed
near the lows. Again, this intraday shift in sentiment continues to
suggest that fear is
continuing to subside. However, today’s action puts the VIX in more oversold territory,
meaning the market is getting more overbought. Therefore, we are close to
getting a CVR II sell signal. Keep an eye out for the RSI of the VIX to
up-tick
to trigger the signal. In addition, the VIX has continued to move further away
from its 10% below its 10-day moving, as a result, we still have a CVR
III sell signal.

Likewise the VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)
exhibited somewhat similar behavior as it opened in the upper half of its range, but
then closed near the halfway point of today’s range. The VXN has now broken its
5-day trend of opening in the upper half and closing near the lows of the
day. This intraday shift in sentiment suggests that fear is slowly
creeping back up. The RSI of the VXN up-ticked today, giving us a CVR II
sell
signal for today. In addition, the VXN is still at an extreme relative to
its 10-day moving average. Therefore, we also had a CVR
III sell signal for today.

Points of Significance:

AVANT!
(
AVNT |
Quote |
Chart |
News |
PowerRating) gapped out of an ascending
triangle on five times its average daily volume after they announced better-than-expected earnings. Despite reporting better-than-expected earnings,
Versign
(
VRSN |
Quote |
Chart |
News |
PowerRating) shed 20% today on five times average daily
volume after they announced plans to sell up to $750 million in stock
which would dilute the stakes of existing shareholders Versign closed just
under its 50% retracement level from its September lows. Digital River
(
DRIV |
Quote |
Chart |
News |
PowerRating)
shot up nearly 20% on 10 times average daily volume after they announced
better-than-expected results. Affymetrix
(
AFFX |
Quote |
Chart |
News |
PowerRating) rose 15% today on seven
times average daily volume, but closed right under its 50% retracement level
from its June highs. Boeing
(
BA |
Quote |
Chart |
News |
PowerRating) gapped up on double its average volume today
in anticipation of government orders for fighter jets. Boeing’s implied
volatility is at a new high, which means that its options are becoming expensive.

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!