Friday’s Options Alerts

• July 11, 2002
• TradingMarkets Editors

The major averages had a rock
and
roll day, but in the end, the S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating)
saw green while the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) finished slightly lower.

News of Yahoo’s
downgrade and accounting troubles from Bristol Myers
(
BMY |
Quote |
Chart |
News |
PowerRating) initially overweighed
positive news from Walmart
(
WMT |
Quote |
Chart |
News |
PowerRating) and Eastman Kodak. At one point, the Dow
dropped more than 200 points and hit a 9.5 month low while the S&P and the
Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) continued to dig deeper into 5-year lows.

Volume was
heavy today, but decliners still beat out advancers. The only positive is that
the averages are showing a slight positive divergences in with their 14-day RSI.
As always, follow though will be key, but lately we’ve only been able to muster one
or two days of gains before coming back down, so be careful.

On the economic
front, the June PPI increased 0.1% vs. a flat reading expected by economists.
The core PPI increased 0.2% compared to the 0.1% expected increase, still
inflation does not seem to be problem. For more information on today’s action, please refer to
the market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped opened,
ran to levels not seen since last September, before finally closing near the
lows of the day. This shift
in intraday sentiment again shows decrease in fear. We had a plethora of CVR
buy signals today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) also gapped up, ran to its post-October 2001 levels and closed near the highs of the day. This shift in intraday sentiment
also shows an increase in fear. The VXN triggered a CVR 3 buy signal
today, triggered by the VXN. With
today’s big increase in fear and our oversold conditions, we could see a bounce
soon.

Points of Significance:

IDEC Pharmaceuticals
(
IDPH |
Quote |
Chart |
News |
PowerRating)
gained over 12% on heavy volume.
The shares jumped after the company announced that they expected second quarter
earnings above expectations. Shares of IDEC, which have outperformed its
other biotech counterparts in recent times are continuing to trade in a base.
Volatility is quite high on this one, so a spread play would be a better choice
than buying outright options.

Ford
(
F |
Quote |
Chart |
News |
PowerRating) fell more than 5% on more than
double its average volume. Ford and rival automaker General Motors
(
GM |
Quote |
Chart |
News |
PowerRating) were
knocked down on consumer spending concerns. Shares of Ford dropped to a 5 year
low.

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	38.64	DOWN 0.38	CVR 1, 2, 3, 6 BUYS	17.09% Above	At Extreme
VXN	68.99	UP 3.77	CVR 3 BUY	13.10 % Above	At Extreme

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.

Name	Symbol	Net % Change	Volume	Avg. Volume
Medimmune	MEDI	+ 15.92	16816	6923
IDEC Pharmaceuticals	IDPH	+ 12.53	4389	2016
HealthSouth	HRC	– 6.54	4165	708
Yahoo!	YHOO	+ 5.98	17939	6209
Ford Motor	F	– 5.78	7799	1785
Home Depot	HD	– 5.56	884	347

Spike Up

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
Medimmune	MEDI	86.6	127	108.8	38.8
Genentech	DNA	33.9	23.6	23.8	16
Brunswick	BC	49.9	35.4	38.9	31.2
HealthSouth	HRC	75.2	55.3	47.3	31
MeriStar Hospitality	MHX	33.6	25.7	31.7	19.5
Charter One Financial	CF	31	24.1	33.8	17.4

Please use stops on every trade!