Tuesday’s Options Alerts

  • May 20, 2002
  • TradingMarkets Editors

The markets started the week off
on a
negative note after last week’s big turnaround. A warning about more terrorist
attacks and a negative LEI report dampened buyers’ moods. However volume was
somewhat light as we started on the pre-holiday week. After being last week’s
biggest winners, tech issues such as Internet
(
$DOT.X |
Quote |
Chart |
News |
PowerRating) and
(
$GSO.X |
Quote |
Chart |
News |
PowerRating)
gave some back today. Healthcare
(
$HMO.X |
Quote |
Chart |
News |
PowerRating) stocks, which have been strong
performers this year, were weak for the day. Meanwhile gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) and
oil stocks
(
$OSX.X |
Quote |
Chart |
News |
PowerRating) were the the day’s strongest performers. The index of economic
indicators (LEI) fell 0.4% in April, the first decline in over six
months. For more information on today’s action, please refer to
the market
recap.

Volatility rebounded a little after
taking a beating last week. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened near the bottom third
of its range and closed slightly above the midpoint of its range. This shift in intraday
sentiment again suggests an increase in fear. Following Friday’s CVR
III sell, we have a CVR
II sell for today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened and closed near the lows
of the day. There was no significant shift in intraday sentiment
today.

Points of Significance:

Accenture
(
ACN |
Quote |
Chart |
News |
PowerRating)
jumped more than 7% on over eight times its average volume. The shares ran
up today despite the announcement of a $1.8 billion secondary offering. The
stock is testing resistance at its 200-day moving average. A break above even
more resistance at 21.90 would be a positive.

IDEC Pharmaceuticals
(
IDEC |
Quote |
Chart |
News |
PowerRating)
dropped 5% on below average volume, however its options activity was very heavy.
Biotech issues were once again weak on the news of Imclone
(
IMCL |
Quote |
Chart |
News |
PowerRating) systems. The shares
appear to be coming out of a counter trend rally. This could be a potential bear
or back spread candidate.

Wellpoint Health Networks
(
WLP |
Quote |
Chart |
News |
PowerRating)
dropped almost 6% on four times its average volume. This came after Prudential
Securities downgraded the sector based on valuation and litigation concerns.
Shares of Wellpoint did fall below its 50% retracement from its March low. There
is heavy activity in the July 80 puts.

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 21.56 UP
1.28		 CVR
II SELL		 5.70%
Below		 Not
At Extreme
VXN 42.88 DOWN
0.06		 NONE 8.07
% Below		 Near
Extreme

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

Name Symbol Net
% Change		 Volume Avg.
Volume
Accenture ACN +
7.30		 14962 638
USEC
Inc.		 USU +
6.85		 11522 123
IDEC
Pharmaceuticals		 IDPH –
5.67		 15180 1794
Wellpoint
Health Networks		 WLP –
5.83		 2595 346
Adobe
Systems		 ADBE –
4.96		 2094 760
Triquint
Semiconductors		 TQNT –
4.70		 764 174

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
Allied
Capital Corp.		 ALD 58.9 46.1 41.1 21.5
North
Fork Bancorp.		 NFB 19.4 15.9 28.5 16.7
Istar
Financial		 SFI 20.3 17.1 31.1 16.9
Albertsons ABS 32.1 27.2 32.8 22.7
NPS
Pharmaceuticals		 NPSP 99.3 86.9 80.4 50.3
Biogen BGEN 73 64.4 61.7 35.8

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
MIM
Corporation		 MIMS 83.7 111.3 84.1 64.9
Compass
Bancshares		 CBSS 17.7 22.6 30.9 17.9
Progress
Energy		 PGN 16 19.7 28 11.8
Northeast
Utilities		 NU 19.6 23.1 30.8 21.7
Simplex
Solutions		 SPLX 44.7 51.4 92.5 37.1
Lear LEA 30.9 34.1 45.2 30.3

Please use stops on every trade!