Thursday’s Options Alerts

  • March 26, 2003
  • Chris Tyler

With the ETFs closing the
session in what is best described as an ‘inside day’, it
goes without saying that it was most likely a quiet session on Wall Street. As
eyes and ears were tuned in to Radio Baghdad, the key boards on trading desks
were collecting dust collectively. This action didn’t spare the three ETFs from
losses, as all of our dear friends closed in the red on the session, but it did
keep the “profit taking” to a modest half percentage point.

I wrote a nice little spiel in the Nightly
Daytraders Report this evening, and since the content is most likely more
appropriate to the Options spreaders out there we will leave off with tonight’s
edition with that note.

Today’s trade left both the DIAs and
SPYs establishing inside trading days. While there was some range between the
highs and lows of the session, with some good intraday fleecing due to rumored
terrorist alert changes, most of the real action was relegated to particular
subsectors such as Internet Providers. The volatility index, represented by the
(
$VIX.X |
Quote |
Chart |
News |
PowerRating), traded lower on the session, and below recent range lows.
Usually this type of action is indicative of an impending move lower, as the
price action of the index represents complacency on the part of investors. I
personally feel a better trading bet for the active options trader might be a
delta neutral strategy to take advantage of an impending move of significance in
percentage terms . With this method, there is no initial directional risk. You’re
only bet is a strong move away from current levels, at what could be considered
reasonable premium levels in the option contracts of your choice. 

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 32.16 Down
-.50		       
CVR VI SELL		 8.00%
Below 		Not
At Extreme
VXN 43.94 Down
-1.01		        
CVR VI SELL		 5.14%
Below 		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
NETFLIX 
NFLX		        +7% 1570 526
Storage Technology
STK		        -2% 1052 318
Intermune
ITMN		        +2% 2442 345

 

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

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we were unable to retrieve the following category. We are hoping to have this
situation resolved before Friday’s report. Thank you for your patience.

Spike Down

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we were unable to retrieve the following category.

 

Please use stops on every trade!