Monday’s Options Alerts

  • May 10, 2002
  • TradingMarkets Editors

The tame PPI report was of little help
as the markets have now given back the lion’s share of Wednesday’s gains. By
far, the selling was concentrated in the techs as the Nasdaq gave back another
3%. Worldcom’s
(
WCOM |
Quote |
Chart |
News |
PowerRating) second credit downgrade triggered heavy selling in
the telecom and techs as Moody’s downgraded their debt to “junk”
status. Biotechs
(
$BTK.X |
Quote |
Chart |
News |
PowerRating), Airlines
(
$XAL.X |
Quote |
Chart |
News |
PowerRating), and broker/dealers
(
$XBD.X |
Quote |
Chart |
News |
PowerRating) faired poorly. Gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) issues were the sole winners
today. For more information on today’s action, please refer to
the market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating)
opened near its lows and closed near the midpoint of its range. This shift
in intraday sentiment suggests an increase in fear. Once again, no CVR signals
were triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near its lows and closed
near its highs. This shift
in intraday sentiment suggests that fear is increasing. No CVR signals
were triggered by the VXN either.

Points of Significance:

Unlike many other stocks, shares of
American Greetings
(
AM |
Quote |
Chart |
News |
PowerRating) jumped 15% on
more than four times its average volume. The shares were greeted with buyers
today as the company raised first quarter estimates to between 40 to 45 cents a
share from previous estimates of 32 cents a share. The company raised guidance
due to lower costs and improved sales. There is heavy
activity in the July 20 calls.

Beazer Homes
(
BZH |
Quote |
Chart |
News |
PowerRating) dropped 5% on
somewhat light volume. The shares look to be trading in a failed cup-and-handle. Today’s action also has it breaking below its 50-day moving average and
its .618 retracement level. There is heavy activity in the June 20 and 22.50 calls.

Cabot Microelectronics
(
CCMP |
Quote |
Chart |
News |
PowerRating)
dropped over 8% on heavy volume. The shares have been basing within a 6 point
range after gapping lower two weeks ago.

King Pharmaceuticals
(
KG |
Quote |
Chart |
News |
PowerRating) dropped
more than 6% on almost triple its average volume. The shares are starting to
resume their downtrend after a short countertrend rally. King is also sitting on
a new 52-week low. However, there is heavy activity in the June 30
calls.

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 25.03 UP
0.67		 NONE 4.46
% Above		 Not
At
Extreme
VXN 50.73 UP
2.65		 NONE 8.54
% 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
Sprint PCS –
15.74		 6606 2650
Reliant
Resources		 REI –
18.28		 7570 164
American
Greetings		 AM +
14.91		 283 104
Cabot
Microelectronics		 CCMP –
8.56		 3372 1460
King
Pharmaceuticals		 KG –
6.66		 5161 171
Beazer
Homes		 BZH –
5.47		 469 125

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
Reliant
Energy		 REI 47.3 29.4 36.8 28.1
Cooper
Tire & Rubber		 CTB 49.9 32.1 41.7 29.3
Reliant
Resources		 RRI 72.5 48.5 94.0 36.7
King
Pharmaceuticals		 KG 54.8 44.3 59.1 35.2
NRG
Energy		 NRG 30.3 25.1 71.2 23.1
Albertson’s ABS 29.8 24.7 33.2 22.7

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
American
Capital Strategies		 ACAS 21.1 24.6 42.0 24.8
United
Parcel Service		 UPS 12.9 25.0 23.2 11.5
Cemex
S.A.		 CX 24 27.9 33.3 21.9
Total TOT 24.3 28.0 35.3 19.7
Equity
Residential		 EQR 20.4 23.3 27.3 18.3
AK
Steel Holdings		 AKS 38.2 43.0 59.4 38.6

Please use stops on every trade!