Monday’s Option Alerts

  • March 14, 2003
  • Chris Tyler

Since we left off the ETFs
staged an amazing continuation run higher in Thursday’s trade before settling in
to close deep in resistance zones of prior congestion. The
technical action of the day has the DIAs and SPYs closing in Doji candestick
patterns. After a substantial run up in percentage terms, and a total change of
heart in terms of the herd mentality, in such a short period of time, well lets
just say TGIF.

The trade did well, very well indeed, and much
better because it was a well thought out spread. If you missed the last column,
“the trade” that I’m referring to is the DIA spread that was
established Wednesday during the “mini panic” to the downside that has
ended “up” being a mini panic to the upside. The original spread has
been converted from a bull vertical into a butterfly for as close to even money
as you can get,….too bad they can’t all be this good. Even though we know
that’s not the reality of trading, the one reality that is ours to control is to
make the best of the situation at hand by always using spreads.

I put up a chart of the daily VIX action so you
can see where we’ve been and where we currently stand. With the reversal action
during the past two sessions, the fear gauge is well entrenched inside of its
several week trading range. For followers of the CVR signals, a 5 Sell signal
has been established in the VIX as of the close of trade.

 

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 36.34 Up
+.41		       
CVR VI		 0.0%
Above 		Not
at Extreme
VXN 45.80 Up + .83       
NONE		 0.0% 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
Microchip
Technologies 
MCHP		        -8% 8938 1379
International Game Tech
IGT		        -1% 3954 1604
Laboratory Corp
LH		        -1% 6091 766
Qualcomm QCOM        -1% 53655 3794

 

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
Trimeris
TRMS		 56 49 82 47
Avocent
AVCT		 54 48 76 47

 

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
Adobe
ADBE		 46 54 85 45
L-3
Communications
LLL		 41.4 45.4 65.4 30.2

Please use stops on every trade!