Thursday’s Options Alerts

  • January 29, 2003
  • Chris Tyler

Today it was the VXNs turn to
make the move down. Quite frankly, the
VXN continues to remain a bit of an enigma, except for the fact that the NASDAQ
continues to outperform both the S&P 500 and the Dow Industrials. The index
has remained entrenched much closer to its lows, rather than resistance levels
above. Where’s the fear down here? The ETFs all finished the session higher,
with gains between .40 to 1.25%, and establishing a bullish engulfing pattern
off of recent lows.

Price and volume first, volatility second is
something I’ve always tried to preach. Price action looks good, so to be long,
and spread of course, seems to be the right course of action. But, wait just a
“second”. As mentioned above, the VXN is giving the warning flag of
sorts, even though it does establish a CVR II Buy signal this evening. What’s
the flag mean you ask? It means keep it tight, adhere to your stops, and monitor
any spread positions aggressively if price action starts to deteriorate.
Depending on the situation at hand, it could mean taking that vertical bull
spread and establishing a 1 by 2 or a butterfly, if you have been able to
capture gains thus far. Or it may be as simple as taking half off. Readjusting
to changing market conditions and staying spread is how we keep ourselves above
water, while everything else sinks into the abyss. 

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 35.20 Down
-.32		        
None		 8.84%
Above 		Not
at Extreme
VXN 43.52 Down -3.21       
 CVR II  		 1.7% Above Not
at Extreme

 

Abnormal Options Volume — This list
includes both percentage movers that are normally associated with an increase in
options activity, as well as stocks that have unusually high activity and / or
technical situations,
reflecting increased speculation of a potential price move.

Name Symbol Net
% Change		 Volume Avg.
Volume
Laboratory
Holdings 
LH		       
+3%		 3645 1154
Silicon Laboratories
SLAB		        +5% 2512 1105
Jabil
Circuits
JBL		       
-3%		 10135 1063
Marvell
Technology
MRVL		       
0%		 6549 2734

 

Stocks With Spikes in Implied
Volatility — Stocks with Increases and Decreases in implied
volatility compared to previous day. Candidates are then screened qualitatively.
These lists represent those issues that carry a blend of liquidity and/or
technical setups that might deserve further notice. 

Spike Up

Name Symbol IV Previous
IV		 High
IV		 Low
IV
Rambus
RMBS		 100 78 119 75

 

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
Novellus
Systems
NVLS		 56 66 85.3 57
Marvell
Technology		 MRVL 70 80 119 63.6
Wallace
Computer		 WCS 26.6 30 44.5 27

 

Please use stops on every trade!