Friday’s Option Alerts

  • February 13, 2003
  • Chris Tyler

As promised, an early edition
of the options report, and I’ll I can say is, “can I time it or
what?”. Today’s report coincides
with a nice technical bounce off of price supports in two of the three ETFs. The
SPYs traded all the way down to the 78% Fibonacci support level before tailing
higher, along with the DIAs and QQQs, to establish bullish candlestick patterns
known as hammers. A very appropriate name for what has been happening as of late
in the marketplace.

I would expect to see something more than the
half session technical bounce we witnessed this afternoon. With no real catalyst
concerning the geopolitical environment to spark the rally, today’s bounce can
be classified as a short covering rally, with some institutional nibbling thrown
in. Can you blame them? The mood has been dour to say the least, and fear has
definitely been evident the past couple of sessions, but not the type one would
normally associate with a true bottom. 

I’ve been wrong before, and certainly I’ll be
wrong again, but the one thing I do know is that  if I use disciplined
trading tactics such as staying spread, then I’ll definitely be staying alive in
this market, regardless if the animal spotted is a bull or bear.

As stated, fear has been seen hanging out in the
markets the past couple of days, we just wish he would do his best grim reaper
and get it over with. At the moment the dynamic duo, the VIX and VXN are
registering one buy signal apiece as we close the day’s session in potential
bounce mode off technical supports. The VIX is still in consolidation mode above
prior supports after testing range highs, while the VXN, which rallied 6% on the
session continues to play catch up with its more popular sibling.

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 38.45 Down
-.65		        CVR
I Buy		 3.05%
Above 		Not
at Extreme
VXN 51 Up +3.50       
CVR V Buy		 6.30% Above Not
at Extreme

 

Abnormal Options Volume — This list
includes both percentage movers that are normally associated with an increase in
options activity, as well as stocks that have unusually high activity and / or
technical situations,
reflecting increased speculation of a potential price move.

Name Symbol Net
% Change		 Volume Avg.
Volume
Home
Depot 
HD		       
-2%		 38724 16273
Qualcomm
QCOM		        -7% 63539 19449
Cardinal Health
CAH		        -1% 12787 4270
Gilead Sciences GILD        -4% 5028 2081

 

Stocks With Spikes in Implied
Volatility — Stocks with Increases and Decreases in implied
volatility compared to previous day. Candidates are then screened qualitatively.
These lists represent those issues that carry a blend of liquidity and/or
technical setups that might deserve further notice. 

Spike Up

Name Symbol IV Previous
IV		 High
IV		 Low
IV
Barr
Labs
BRL		 40 35 57 30
Convergys
CVG		 48 43 62 33.4
Jacobs
Engineering		 JEC 36 32.5 43.7 30
Tier
Technologies		 TIER 58.5 53.2 64 45.3

 

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
Cognizant
Technology
CTSH		 40 45.5 75 45.5

 

Please use stops on every trade!