Monday’s Option Alerts

• February 21, 2003
• Chris Tyler

From oversold to overbought,
to ‘just right”. When
we last left off, the 3 Little Bears, or the ETFs as most know them by, had
quickly reversed course into resistance. The remainder of the week has been
choppy, light consolidation type work that leaves the indices neither overbought
or oversold, but simply “just right” to steal a quote from another
fairy tale. 

The VIX and VXN are both at respective daily
chart supports. Neither is registering any signals as of the close of trade, but
with today’s action I personally would have preferred to see some fear, with
premium expansion, as we head into the weekend. It’s nice that those who are
playing the game right now, and there aren’t many ladies and gentlemen, felt
compelled to cover shorts into resistance, but some option buying, showing some
hesitancy would have been nice. We are, as mentioned previously (in the nightly
daytraders report) in a news driven environment with a lack of liquidity. This
adds up to some fast and tricky trading, and all the more reason, if you choose
to participate, to do so with price, volume, and spreading to back up your bet.

Points of Significance:

Volatility Index	Close	Net Change	Signals/Direction	% Above/Below 10 Day Moving Average	Significance
VIX	34.14	Down -1.54	       None	7.42% Below	Not at Extreme
VXN	46.10	Down -2.46	       None	3.82% Below	Not at Extreme

This is a chart of the VIX, the VXN is also
testing its February lows as of the close of trade. With equity prices heading
further into resistance and no decisive buying, the ETFs look prone to some more
downside filling (news driven environment makes this analysis specific to this
point in time).

 

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.

Due to the influence of expiring contracts we
will not have any equities under this classification this evening.

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

None Today.

Spike Down

Name	Symbol	IV	Previous IV	High IV	Low IV
Wallace Computer	WCS	23.3	25.5	44.6	25.5
Whole Foods Markets	WFMI	29.1	32.2	46.5	28
eBay	EBAY	32.1	35.2	62.2	35.2
Reebok	RBK	33.4	37	57.6	32.7

 

Please use stops on every trade!