Thursday’s Options Alerts
The numbers at the end
of the day don’t always reveal the drama between the opening bell and
the close of trading. Today was one of those sessions. Early
market losses were attributed to: technical follow through from Tuesday’s
positive, but somewhat weak afternoon finish; less than inspiring premarket earnings
releases; estimate cuts on SBC; weak foreign markets; and, of course, concern
over Greenspan and company’s recent 50 basis cut and the associated testimony to the JEC this morning.
In the midst of all the negativity, equity prices
falling and volatility levels testing the upper boundaries of their tight
consolidation ranges mentioned in yesterday’s column, along comes news that Iraq
will “once again” cooperate with UN inspectors. Good news
from the bad guys pushed the markets skyward, but in a case of what goes up
must come down, the market quickly decided this “news” had already
been reflected in prices, and general market activity quickly reversed to the
downside.
At the end of the day, the
volatility associated with the early morning pessimism followed by the
volatility surge and subsequent decline in prices off the Iraq news, made for a relatively tame albeit mixed bag in the broader averages. The
Dow Jones
Industrials
(
$INDU |
Quote |
Chart |
News |
PowerRating) finished up .14%, the S&P 500
(
$SPX |
Quote |
Chart |
News |
PowerRating) down
.05%, while the tech-heavy Nasdaq
(
$COMP |
Quote |
Chart |
News |
PowerRating) once again put in the best
performance of the day, with a .08% gain.
The price performances of the broader market
averages also ended up weighing on the VIX
(
$VIX |
Quote |
Chart |
News |
PowerRating) and the VXN
(
$VXN |
Quote |
Chart |
News |
PowerRating),
containing their respective intraday price swings to the recent trading range
mentioned in yesterday’s report. Close, but no cigar, as both prices and
volatility are still within their coiled springs. On that note, there were no CVR
signals at the close of trading, although there was a divergence between these
two indices at the end of the day. The VXN was down as the Nasdaq maintained a
more positive tone than the other major indices. On the other hand, the VIX was
up on the session as recent investor concern in many so-called blue chip
companies is still forcing traders to pay additional premium for the right to
sleep soundly at night.
Points of Significance:
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 36.28 | UP +.89 |
NONE | 3.75% Above |
Not At Extreme |
| VXN | 54.46 | DOWN -.79 | NONE |
3.81% 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 |
| Nordstrom | NORD |
-13% |
1199 | 493 |
| Sears | S |
-7% | 43588 | 8393 |
| Quest Diagnostics |
DGX |
-3% |
7293 | 1042 |
| Williams-Sonoma | WSM |
+2% | 4670 | 454 |
| Ryland | RYL |
0.0% |
3725 | 561 |
| Oil Service Holders | OIH |
-3% | 2655 | 336 |
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 |
|
Pacific Century Financial |
BOH |
32.9 | 25.7 | 37.9 | 19.3 |
| Merk & Co. |
MRK |
38.8 | 31.6 | 47.5 | 21.2 |
| Bristol Meyers & Sqibb |
BMY |
47.8 | 40.7 | 66.8 | 26.5 |
| Quest Diagnostics |
DGX |
56.3 | 48.8 | 72.9 | 25.1 |
| Pfizer | PFE |
35.4 | 30.8 | 48.7 | 20.2 |
| Neoware Systems |
NWRE |
91.5 | 80.5 | 108.0 | 78.8 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
|
Prudential Financial
|
PRU |
37.7 | 44.0 | 50.6 | 21.2 |
| Cardinal Health |
CAH |
47.5 | 52.1 | 59.5 | 23.9 |
Please use stops on every trade!