Monday’s Options Alerts

• June 28, 2002
• TradingMarkets Editors

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.

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

Spike Up

Spike Down

Please use stops on every trade!