Thursday’s Options Alerts
Stocks were weaker again for
the third straight day. Despite Cisco reaffirming their earnings, stocks were hit again as earnings warnings
from General Mills
(
GIS |
Quote |
Chart |
News |
PowerRating) and Daimler Chrysler
(
DCX |
Quote |
Chart |
News |
PowerRating) kept buyers at bay.
In addition, Moody’s downgrade of Computer Associates
(
CA |
Quote |
Chart |
News |
PowerRating) also added
pressure on the markets. For more information on today’s action, please refer to
the market
recap. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened in the lower third of its range and
closed near the top third. Once again, this intra-day shift in
sentiment suggests that fear is still increasing. Also, another CVR
III buy signal today was triggered today. The 10-day moving average of the
VIX is getting stretched to extremes and the market is getting more oversold.
The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened in the lower third of its range and closed near
its highs for the day. This intraday shift in sentiment also suggests that fear
is still rising. The VXN did not trigger any CVR signals. With both volatility
indices in overbought areas, we could see a bounce soon.
Points of Significance:
Of one of the few bright spots today, Circuit
City Carmax
(
KMX |
Quote |
Chart |
News |
PowerRating) broke out of a month-long base on over triple its average
volume. The company upped its fourth quarter earnings outlook to 16 to 17 cents
ahead of the Street’s expectations of 13 cents per share. There is heavy volume
February 22.50 calls.
Food giant General Mills
(
GIS |
Quote |
Chart |
News |
PowerRating) dropped over
10% on five times its average volume. The shares broke down from a head &
shoulders top and gapped below their 200-day moving average. The company
lowered their third quarter projections to 27 to 29 cents per share versus previous
estimates of 40 to 44 cents. The company blamed the lowered outlook on “unusually
weak volumes." There is heavy activity in the February 45 calls, February
45 puts, and March 40.
Versign
(
VRSN |
Quote |
Chart |
News |
PowerRating) dropped 10% percent today on
triple its average volume. The shares have not been at this level since May of
1999. Worries over accounting issues related to minority investments affected
the stock today. However analysts from several firms claim that investor’s fear
about the company is unfounded. Option activity on Verisign was very heavy.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 28.15 | UP 1.38 |
CVR III Buy |
14.85 % Above |
At Extreme |
| VXN | 48.97 | UP 2.23 |
NONE | 7.93 % 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 |
| Circuit City CarMax |
KMX | + 18.78 | 513 | 178 |
| Cymer | CYMI | + .39 |
8513 | 1804 |
| Computer Associates |
CA | – 13.54 | 12527 | 4353 |
| Regeneron Pharmaceuticals |
REGN | – 11.02 |
1883 | 272 |
| General Mills | GIS | – 10.59 | 2191 | 1026 |
| Verisign | VRSN | – 9.52 |
33823 | 9652 |
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 |
| AT&T Canada |
ATTC | 43.4 | 22.6 | 29.1 | 12.2 |
| Whirlpool | WHR | 49.7 | 34.5 | 51.9 | 35.4 |
| Business Objects |
BOBJ | 97.8 | 48.3 | 88.2 | 51.2 |
| Regeneron Pharmaceuticals |
REGN | 80.5 | 61 | 81 | 52 |
| Hotel Reservations |
ROOM | 79.6 | 62.6 | 74 | 56.5 |
| Verisign | VRSN | 95.4 | 75.6 | 96.5 | 68.8 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Tyco International |
TYC | 116.2 | 147.6 | 82 | 28.7 |
| SEI Investments |
SEIC | 41 | 48.6 | 66.8 | 41 |
| Sherwin-Williams | SHW | 41.9 | 48.8 | 40.4 | 25.7 |
| Anheuser Busch |
BUD | 18.9 | 21.8 | 30.7 | 19.1 |
| McDermott Int’l |
MDR | 107.3 | 123.2 | 106.2 | 65.3 |
Please use stops on every trade!