Thursday’s Options Alerts
Stocks fell hard for the second day in a
row as news of more corporate warnings and a record trade gap hit the wires. The
Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) was again the weakest of the major indices as it dropped
over 2% thanks in part to earnings warnings from Nokia
(
NOK |
Quote |
Chart |
News |
PowerRating) and
Genzyme
(
GENZ |
Quote |
Chart |
News |
PowerRating).
News of the record $35.9 billion in April overshadowed the very positive Philly
Fed Business Index. The June Philly Fed Business Index jumped to a reading of
22.2 from May’s reading of 9.1. This was the highest reading in three years.
Chip
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) and biotech
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) issues were the worst
performers of the day. The SOX broke the 400 level and is only 50 points away
from its October lows. Gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) issues were the strongest performers
of the day as the increased uncertainty in the markets has investors moving into
a safe haven. For more information on today’s action, please refer to
the market
recap.
Once again, the VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened
near its lows, and closed on the highs of
the day. This shift
in intraday sentiment shows an jump in fear. The VIX was stretched over 10% from
its 10-day moving average, thus triggering a CVR 3 buy signal. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) also gapped up, opened near its lows, and closed
near the highs of the day. This shift in intraday sentiment also shows a jump in fear. The VXN didn’t trigger any signals
today.
Points of Significance:
Genzyme
(
GENZ |
Quote |
Chart |
News |
PowerRating) plunged over 23% on
almost five times its average volume. The shares were hammered after the company
warned for the second time this year that its second quarter and full-year
profits will be below expectations due to weak sales of its kidney drug Renagel.
The shares fell to a level not seen since December 1999. Although its implied
volatility is high, it could be a put spread candidate on a
pullback.
International Rectifier
(
IRF |
Quote |
Chart |
News |
PowerRating)
dropped 11% on over four times its average volume. The shares have broken its
intermediate uptrend line. It found support right at its 50% retracement level
from its September lows. Despite good news from Semiconductor Equipment and Materials International
yesterday, semis continued their sell-off.
Emulex
(
EMLX |
Quote |
Chart |
News |
PowerRating) dropped 7% on
slightly below-average volume. The shares are starting to break down from a head-and-shoulders.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 32.50 | UP 2.79 |
CVR 3 BUY |
14.84 % Above |
At Extreme |
| VXN | 57.93 | UP 2.69 |
NONE | 6.61 % 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 |
| Genzyme | GENZ | – 23.85 |
1132 | 305 |
| International Rectifier |
IRF | – 10.75 |
3102 | 132 |
| Andrx Corp. |
ADRX | – 7.79 |
43920 | 1411 |
| EchoStar Communications |
DISH | – 9.14 |
6603 | 310 |
| Emulex | EMLX | – 7.64 |
7537 | 1640 |
| Americredit | ACF | – 6.35 |
2094 | 718 |
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 |
| Genzyme | GENZ | 74.6 | 60.7 | 66.6 | 43.6 |
| Dell Computer |
DELL | 59.4 | 51.9 | 50.3 | 38.3 |
| Clear Channel Communications |
CCU | 56.5 | 49.6 | 49.9 | 35.0 |
| SEI Investments |
SEIC | 45.2 | 39.7 | 46.3 | 33.9 |
| Comcast Class A |
CMCSK | 57.7 | 50.9 | 55.6 | 28.1 |
| Hott Topic |
HOTT | 50 | 44.5 | 62.6 | 40.6 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Dreyers Brand Ice Cream |
DRYR | 18.8 | 29.0 | 33.8 | 31.6 |
| Progress Energy |
PGN | 15.3 | 19.5 | 27.1 | 11.8 |
| GP Financial |
GPT | 25.8 | 29.9 | 36.8 | 22.4 |
| Lone Star Steakhouse |
STAR | 28.6 | 33.0 | 45.2 | 12.1 |
| Northeast Utilities |
NU | 21.1 | 24.1 | 30.0 | 20.6 |
Please use stops on every trade!