Monday’s Options Alerts…
The markets rallied for the third straight
session as a plethora of economic data pointed to signs of an economic recovery
next year. Consumer Confidence came in at 93.7 vs. the expected 84.9. This
represents the biggest jump in nearly four years. New home sales increased to
6.4%, which was the largest jump in nearly a year. Also, Initial Jobless
claims came in at 392,000 vs. the expected 402,000. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened
in the lower half of its range and closed above the open. The intraday shift in sentiment
suggests that fear is creeping back up. Today we have another CVR
VI sell signal, along with CVR
I and II sell signals. The VIX appears to be starting to work off this
overbought condition. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened on its highs and closed near
in the lower half of its range. This intraday shift in sentiment also
suggests that fear is
declining. The VXN did not trigger any CVR signals today. However, it
is now in oversold territory and near a CVR II sell signal.
Points of Significance:
Inrange Technologies
(
INRG |
Quote |
Chart |
News |
PowerRating) dropped 17% on
seven times its
average volume. The company announced that their CEO Gregory Grodhaus resigned
to pursue other interests. Inrange also reaffirmed their fourth quarter earnings.
There is heavy put volume in the Jan. 10, 12.50 and 15 strikes.
ImClone Systems
(
IMCL |
Quote |
Chart |
News |
PowerRating) continued its descent today. It is now approaching its .618
retracement level at 54.32. There is very heavy put activity along the front
month strikes.
Despite being hailed as a “Hold” from UBS
Warburg,
Rational Software
(
RATL |
Quote |
Chart |
News |
PowerRating) jumped 5% on normal volume today. However its
options traded almost six times their average volume. There is heavy activity in
the Jan. 17.50 puts.
Implied volatility for Newport News Shipbuilding
(
NNS |
Quote |
Chart |
News |
PowerRating)
and Ultramar Diamond Shamrock has gone to new lows. Look for long volatility
strategies such as straddles, strangles, backspreads and outright option
purchases.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 22.50 | UP 0.22 | CVR I, II, VI Sell |
5.34 % Below | Not At Extreme |
| VXN | 45.76 | DOWN 1.70 |
NONE | 8.13 % Above |
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 |
| Inrange Technologies | INRG | – 17.32 | 1505 | 262 |
| Sunrise Assisted Living |
SRZ | + 11.75 | 572 | 126 |
| Med-Design | MEDC | + 7.58 | 765 | 340 |
| ImClone Systems | IMCL | – 5.23 | 17349 | 4929 |
| Rational Software | RATL | + 5.05 | 6168 | 1022 |
| Retek | RETK | + 4.41 | 768 | 116 |
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 |
| Newport News Shipbuilding | NNS | 36.7 | 25.2 | 30.7 | 18.4 |
| Expedia Inc. | EXPE | 62.7 | 52.1 | 100.2 | 49.7 |
| Pharmacyclics | PCYC | 101.1 | 85.3 | 155.4 | 71.2 |
| Bristol Myers Squibb | BMY | 43.5 | 36.8 | 49.9 | 25.3 |
| WorldCom | WCOM | 45.8 | 39.6 | 60.3 | 48.3 |
| Fifth Third Bancorp | FITB | 25.4 | 22.3 | 41.9 | 23.8 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| HotJobs.com | HOTJ | 22.7 | 40 | 106.6 | 54.9 |
| Ultramar Diamond Shamrock |
UDS | 10.1 | 15.6 | 35.8 | 27.5 |
| Dean Foods | DF | 26.8 | 36.9 | 39.4 | 18.1 |
| ServiceMaster | SVM | 21.8 | 28.1 | 33.8 | 21.5 |
| Repsol S.A. | REP | 26.8 | 32.4 | 48 | 26.8 |
| Istar Financial Inc. |
SFI | 18.7 | 22.6 | 27.8 | 23.4 |
Please use stops on every trade!