Thursday’s Options Alerts…
Stocks fell sharply today as Intel’s reduction of
capital spending and J.P. Morgan’s disappointing earnings dragged the markets down.
Semiconductor and Banking stocks were among the biggest losers. For more information
on today’s action, please
refer to the market
recap. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened near the midpoint of its range and closed
near its high.
This intraday shift in sentiment
suggests that fear is now increasing. Adding to yesterday’s CVR
II buy signal, we have a CVR
VI buy signal now as well. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)
opened near its high and closed in the lower half of the range. This intraday shift in sentiment
suggests that fear is decreasing. The VXN did not trigger any signals today.
It seems that both volatility indices are reverting to their means. As John
Forelli of Independence Investment said, ” Suddenly, investors who bought
into the economic recovery story last quarter are getting scared
again.”
Points of Significance:
One of the few bright spots of the day,
Interdigital Communications
(
IDCC |
Quote |
Chart |
News |
PowerRating), jumped 26% on over ten times its average volume. The company
announced that they entered into a licensing agreement with NEC Corp.
(
NIPNY |
Quote |
Chart |
News |
PowerRating)
for the sale of its third-generation wireless products. Interdigital will
receive royalties on every unit sold by NEC. Interdigital will also be receiving
an advanced royalty payment of $19.5 million. Its implied volatility is
high, thereby
making its options expensive.
Semiconductor maker Teradyne
(
TER |
Quote |
Chart |
News |
PowerRating) dropped
14% on
over double its average
volume. The shares have now fallen below its 50-day moving average and its .382
retracement level from its October lows. The company disappointed Wall Street as
they posted a loss of $ 0.63 per share vs. the expected loss of $ 0.43 per
share. Its options traded over four times its average volume. There is heavy put
activity.
Shares of Fluor
(
FLR |
Quote |
Chart |
News |
PowerRating) fell 13% on over four times its average
volume and continued to break down from a descending triangle.
The company slumped on the news that Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating) would end its plans to
build new power plants and cut capital spending. There is heavy activity in the
February 12.50 and 15 puts.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 25.26 | UP 0.84 |
CVR VI BUY |
7.71 % Above |
Not At Extreme |
| VXN | 49.43 | UP 1.41 |
NONE | 2.63 % 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 |
| Interdigital Communications |
IDCC | + 26.21 | 2752 | 604 |
| LTX Corp. |
LTXX | – 16.19 | 1211 | 237 |
| Teradyne | TER | – 14.17 | 5723 | 1113 |
| Earthlink | ELNK | -13.95 | 2357 | 611 |
| Fluor | FLR | – 13.03 | 733 | 135 |
| Digital River |
DRIV | -11.49 | 1030 | 316 |
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 |
| Federal Home Loan | FRE | 37.9 | 22.3 | 37.3 | 22.6 |
| Progress Energy |
PGN | 34.2 | 22.5 | 28.0 | 17.9 |
| Pepsi Bottling Group | PBG | 42.6 | 29.9 | 37.6 | 29.3 |
| Mattel | MAT | 49.4 | 34.7 | 41.5 | 32.3 |
| Waste Management | WMI | 42.6 | 30.4 | 46.2 | 29.0 |
| Minnesota Mining & Mfg. | MMM | 44.6 | 32.0 | 47.2 | 24.2 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Bristol Myers Squibb |
BMY | 30.1 | 67.1 | 49.9 | 25.3 |
| ConAgra Inc. |
CAG | 23.7 | 29.3 | 30.8 | 25.1 |
| AT&T Canada |
ATTC | 15.2 | 17.8 | 29.1 | 10.3 |
| Mandalay Resort Group |
MBG | 44.3 | 50.5 | 67.4 | 32.6 |
Please use stops on every trade!