Tuesday’s Options Alerts
It was another bad day for the major
averages today as the sell off continued. What started as modest selling
accelerated as we headed into the final hour. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating), which has
held up in recent times despite the tech sell off, dropped almost 2% today thanks in part to a 7% drop in IBM
(
IBM |
Quote |
Chart |
News |
PowerRating). All eyes will be on the
Fed
tomorrow as they will announce which direction to take interest rates. The
current stance is that the Fed will stay neutral. For more information on today’s action, please refer to
the market
recap.
Volatility was lackluster during most
of the day, but shot up as the selling intensified during the final hour selloff.
The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating)
opened near the lower third of its range and closed near the highs. This shift
intraday suggests that fear is increasing. No CVR signals were triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)
also opened
near the lower third of its range and closed on the highs of the day. This shift
in intraday sentiment also suggests an increase in fear. The action in the VXN
triggered both CVR III and VI buy signals today.
Points of Significance:
Documentum
(
DCTM |
Quote |
Chart |
News |
PowerRating) dropped another
17% on over triple its average volume. Despite UBS Warburg reiterating their
“Buy” rating, the shares continued their descent. The shares are very
close to the .786 retracement level going back to last September’s lows. There is heavy activity in the
May 17.50 puts.
Charles Schwab
(
SCH |
Quote |
Chart |
News |
PowerRating) dropped 6% on
average volume. The stock was among the weakest in the Broker/Dealer index,
which fell a little over 4%. The stock is now back at its October lows. There is
heavy activity in the May 10 calls.
Ocean Energy
(
OEI |
Quote |
Chart |
News |
PowerRating) dropped 5% on
heavy volume. Energy stocks came under pressure today as Iraq is restarting oil production after their protest.
There is heavy activity in
the May 20 and 22.50 puts.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 24.88 | UP 1.65 |
NONE | 5.92% Above |
Not At Extreme |
| VXN | 49.12 | UP 2.86 |
CVR III, VI BUY |
12.87 % Above |
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 |
| Documentum | DCTM | – 17.60 |
676 | 316 |
| Verity | VRTY | – 12.47 |
1179 | 160 |
| Myraid Genetics |
MYGN | – 7.11 |
425 | 160 |
| Human Genome Sciences |
HGSI | – 6.90 |
1983 | 984 |
| Charles Schwab |
SCH | – 6.17 |
2516 | 888 |
| Ocean Energy |
OEI | – 4.91 |
3323 | 1002 |
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 |
| Lone Star Steakhouse |
STAR | 28.3 | 15.4 | 45.2 | 12.1 |
| Financial Sector SPDRs |
XLF | 13.1 | 8.9 | 27.3 | 14 |
| ShuffleMaster | SHFL | 68.4 | 53.2 | 69.5 | 48.7 |
| Pactiv Corporation |
PTV | 32.2 | 26.1 | 33.7 | 26.6 |
| SEI Investments |
SEIC | 35.4 | 28.7 | 49.7 | 33.9 |
| Tyco International |
TYC | 83 | 70 | 109.3 | 28.7 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Public Service Enterprise |
PEG | 16 | 19.2 | 30.3 | 15.3 |
| Simplex Solutions |
SPLX | 41.6 | 48.6 | 92.5 | 37.1 |
| Reckson Associates |
RA | 14.4 | 16.7 | 35.1 | 16.8 |
| Charter One Financial |
CF | 21.2 | 24.3 | 33.8 | 18.1 |
| Plum Creek Timber |
PCL | 17.7 | 20 | 30.1 | 17.2 |
| Pathmark Stores |
PTMK | 21.7 | 24.3 | 55.8 | 21.7 |
Please use stops on every trade!