Monday’s Options Alerts
The selling
vastly accelerated today as lowered outlooks from Microsoft
(
MSFT |
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Chart |
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PowerRating), Sun
Microsystems
(
SUNW |
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PowerRating) and Ericsson
(
ERICY |
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News |
PowerRating), along with a criminal investigation into
Johnson & Johnson
(
JNJ |
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PowerRating) gave the markets its worst week since last
September.
The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating),
which has been down 9 out of the last 10 sessions, was off more than 400 points
at one time, but finished the day down 390 points or 4.64%. For the week, the
Dow dropped more than 8.26% or 717 points. It has now also taken out last
September’s low. This action has now put the Dow at its October 1998 lows.
The
S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) dropped almost 34 points or 3.83%. The Nasdaq was
the least-damaged index as it dropped 37.8 points or 2.78%. The lone sectors up
today were gold
(
$XAU.X |
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Chart |
News |
PowerRating) and insurance
(
$INSRX.X |
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Chart |
News |
PowerRating). Everything
else was deeply red. Economic
data was a non-event as the June consumer price index gained 0.1%, less than the
0.2% increase expected by economists. The core CPI also rose 0.1% compared to an
expected rise of 0.2%.
The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) busted out of
its cup & handle pattern today and came within a hair of Monday’s high. It
gapped higher, ran to near Monday’s high and closed near the highs of the day. This shift
in intraday sentiment obviously shows an increase in fear. Today’s action
triggered a CVR 3 buy signal. Although the index is stretched more than 10% from
its 10-day moving average, the VIX got over 28% above its moving average before
it started to revert to its mean. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) actually showed
declining fear today. It gapped higher, ran up,
and closed near the lows of the day. This shift in intraday sentiment
also shows a decrease in fear. The VXN didn’t trigger any signals today.
Points of Significance:
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 43.45 | UP 3.50 | CVR 3 BUY | 12.59% Above |
At Extreme |
| VXN | 61.17 | DOWN 2.44 | NONE |
5.22 % 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 |
| Johnson & Johnson | JNJ | – 15.84 | 60766 | 10578 |
| Overture Services | OVER | – 15.29 | 2920 | 564 |
| Pepsico | PEP | – 10.17 | 13222 | 5660 |
| Taiwan Semiconductor | TSM | – 8.53 | 10324 | 1503 |
| Daimler Chrysler | DCX | – 8.20 | 4629 | 1656 |
| Electronic Arts | ERTS | – 8.13 | 10956 | 4270 |
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 |
| HPL Technologies | HPLA | 189.1 | 91.5 | 107.9 | 77.8 |
| Expeditors International | EXPD | 62.1 | 43.1 | 40.5 | 28.9 |
| Allete, Inc. | ALE | 44.2 | 32.1 | 29.6 | 16.6 |
| Molex | MOLX | 67 | 51.5 | 52.4 | 37.7 |
| MBNA | KRB | 67.4 | 53.8 | 46.3 | 29.2 |
| Automatic Data Processing | ADP | 50.4 | 40.6 | 43.5 | 23.2 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Felcor Lodging | FCH | 32.5 | 38.7 | 29.3 | 20.2 |
| Petroleo Brasileiro | PBR | 67.9 | 79.9 | 70.8 | 35.6 |
| DSP Group | DSPG | 54.1 | 63.2 | 52.9 | 35.9 |
Please use stops on every trade!