Tuesday’s Options Alerts
The markets ended modestly lower
on this pre-holiday Triple-Witching Friday.
Negative news from two bellwether tech
stocks and worse-than-expected economic numbers dragged the markets lower. Big Blue
got knocked after a New York Times article alleged that IBM did not inform
investors that the sale of one of their business units which was used to lower
operating expenses. However, SG Cowen came out and defended that
allegation.
Dell reported earnings that matched expectations but added that
revenue are likely to fall 3% – 5% this quarter. A lower-than-expected reading
from the Michigan Consumer Confidence index also put a drag on the market.
For more information on today’s action, please refer to
the
market
recap.
The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating)
opened near the lows of the range and closed near its high. This intraday shirt in
sentiment suggests that fear is increasing. No CVR signals were triggered by the
VIX. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near their lows and closed near there highs.
This intraday shift in sentiment also suggests that fear
is increasing. The VXN did not trigger any CVR signals. Both volatility
indices increased today over more accounting woes. Volatility is still low and
suitable for put buying.
Points of Significance:
NVIDIA
(
NVDA |
Quote |
Chart |
News |
PowerRating) dropped over 7% on
over triple its average volume. NVIDIA reported quarterly earnings that blew
past estimates but fell under pressure due to accounting woes. The SEC is investigating
the timing of product costs in the second and third quarters of 2001. In
addition, the SEC is also examining the recording of reserves in the fourth
quarter of fiscal 2000. There is heavy activity in the March 50 and 55 puts.
Circuit City Stores
(
CC |
Quote |
Chart |
News |
PowerRating) dropped 9% on heavy
volume today. No specific news was announced. The shares did break down from a
month long base. There is heavy activity in the March 27.50 puts.
Lehman Brothers
(
LEH |
Quote |
Chart |
News |
PowerRating) over 5% on heavy volume. The shares
stopped just shy of its 50% retracement level from its September 2001 lows.
There is heavy activity in the March 55 puts.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 24.04 | UP 1.15 |
NONE | 4.02 % Below |
Not at Extreme |
| VXN | 44.99 | UP 2.85 |
CVR II Sell |
3.20 % Below |
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 |
| ESS Technology |
ESST | – 11.59 | 1881 | 456 |
| Circuit City |
CC | – 9.12 |
13942 | 1016 |
| NVIDIA | NVDA | – 7.73 | 54952 | 17446 |
| Four Seasons Hotels |
FS | + 7.41 |
715 | 141 |
| Pharmaceutical Resources |
PRX | – 6.10 | 990 | 286 |
| Lehman Bros. |
LEH | – 5.64 |
7740 | 3833 |
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 |
| Xcel Energy | XEL | 30.1 | 24.7 | 31.8 | 23 |
| BJs Wholesale Club |
BJ | 44.7 | 38.2 | 50.6 | 37.1 |
| Marshall Industries |
MI | 21.1 | 18.2 | 33.3 | 19.2 |
| MBIA | MBI | 36 | 31.3 | 52.5 | 26.5 |
| Universal Health Services |
UHS | 39.3 | 34.3 | 54.3 | 35.5 |
| Merrill Lynch |
MER | 40.1 | 35.6 | 62.6 | 35.7 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Walgreen | WAG | 24 | 73.4 | 39.1 | 23.3 |
| Utilicorp United |
UCU | 32.9 | 41.6 | 40.8 | 31.8 |
| Ameren Corp. | AEE | 17.8 | 22.2 | 26.7 | 18.2 |
| Impath | IMPH | 60.5 | 75.3 | 70.9 | 52.8 |
| Greater Bay Bancorp |
GBBK | 37.7 | 46.1 | 55.4 | 34.5 |
| Hartford Financial Services |
HIG | 27.3 | 33.3 | 39.4 | 25.1 |
Please use stops on every trade!