Thursday’s Options Alerts

• June 20, 2002
• TradingMarkets Editors

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.

Abnormal Options Volume With Price Movement
—
Abnormal options volume (calls and puts) with stock price movement

Stocks With Biggest Spikes in Implied
Volatility — Stocks with biggest increases or decreases in implied
volatility compared to previous day

Spike Up

Spike Down

Please use stops on every trade!