Monday’s Options Alerts

Stocks were strong for most of the
session
and appeared to end higher for the second day in a row. The major
averages even shrugged off news of declining consumer sentiment as well as
Xerox’s news that they would restate earnings for the past five years. However,
the averages closed mixed as late-session news of a fire in the Capitol buidling and lack of
conviction to hold over the weekend spoiled the buying mood on this last trading
day of the second quarter. 

Both the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
and S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)

had modest losses while the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating)
gained 3 points.
Airliners
(
$XAL.X |
Quote |
Chart |
News |
PowerRating)
were the strongest performers of the day despite
S&P cutting their credit ratings. Gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating)
and drug issues were
the weakest performers of the day. Expect to see lower volatility next week as
we head into the Fourth of July weekend. For more information on today’s action, please refer to
the market
recap.

Volatility continued to head lower for
the third consecutive day. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating)
opened on its highs and closed
in the lower third of its range. This shift
in intraday sentiment again shows a drop in fear. Once again, no CVR signals were
triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)
gapped down, opened on its highs
and close near the lows of the day. This shift in intraday sentiment
also shows a drop in fear. The VXN triggered did not trigger any CVR signals
today. Both volatility indices closed below their 10-day moving averages in over
a month, either investors are beginning to get complacent or we are experiencing
a down drift in volatility as we head into the summer months.

Points of Significance:

Getty Images
(
GETY |
Quote |
Chart |
News |
PowerRating)
dropped almost
10% on more
than nine times its average volume. The shares were off over 25% at one point.
Getty was under heavy selling pressure today after a bearish report surfaced, raising doubts about the company’s second quarter sales.

Continental Airlines
(
CAL |
Quote |
Chart |
News |
PowerRating)

gained 7.5% today after trading into its November lows. Continental and other
airliners ignored S&P’s credit downgrade for the day.

Nike
(
NKE |
Quote |
Chart |
News |
PowerRating)
gained 4% on more than
double its average volume. The company reported fourth quarter earnings that
beat estimates by 2 cents. The shares gapped higher for the day but finished
weak at they met resistance at its 50% retracement level from its March 20th
high.

Volatility
Index
Close Net
Change
Signals/Direction %
Above/Below 10 Day Moving Average
Significance
VIX 29.13 DOWN
0.89
NONE 3.29
% Below
Not
At Extreme
VXN 57.95 DOWN
5.18
CVR
2, 6 BUY
1.06
% Below
Not
At Extreme

Abnormal Options Volume With Price Movement

Abnormal options volume (calls and puts) with stock price movement

Name Symbol Net
% Change
Volume Avg.
Volume
Getty
Images
GETY
9.29
365 157
AOL
Time Warner
AOL +
7.92
41445 12087
Continental
Airlines
CAL +
7.49
758 125
Viacom VIA +
6.69
1585 738
Nike NKE +
4.33
4666 737
Eli
Lilly
LLY
5.73
6401 904

Stocks With Biggest Spikes in Implied
Volatility
— Stocks with biggest increases or decreases in implied
volatility compared to previous day

Spike Up

Name Symbol IV Previous
IV
High
IV
Low
IV
Univision
Communications
UVN 73.5 54.8 52.5 37.1
Tower
Automotive
TWR 53.4 45.8 56.3 37.4
Polyone
Corp.
POL 49.9 42.9 46.8 42.3
Groupo
Televisa
TV 58 40.4 40 31.6
Orthodontic
Centers of America
OMC 47.3 41.2 51.5 35.3
Chico’s
FAS
CHS 57 51.3 50.9 39.1

Spike Down

Name Symbol IV Previous
IV
High
IV
Low
IV
Nike NKE 35.8 48 35.5 27.2
AT&T
Canada
ATTC 22 28.4 70.2 15.1
Cholestech CTEC 85.6 107.5 87 62.2
Pennz
Energy
PZL 17.2 15.2 43.2 14.8
Omnicom
Group
OMC 89.8 101.9 70.7 24.5
Quest
Software
QSFT 95 105 106.5 71.8

Please use stops on every trade!