Tuesday’s Options Alerts

• February 4, 2002
• TradingMarkets Editors

Stocks started the week
sharply lower as concerns about corporate accounting issues plagued the market.
Tyco International
(
TYC |
Quote |
Chart |
News |
PowerRating) reported that they did not announce acquisitions
which accounted for over one-third of the $11.3 billion that they spent for the
year ended last September 30. Allegedly, Mark Swartz, CFO of Tyco, said that
the purchases “weren’t material compared with the company‘s total
assets.” Companies which have experienced
growth through acquisitions were also under pressure today.
For more information
on today’s action, please
refer to the market
recap. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened near their lows and closed near the
highs of today. This shift in intra-day sentiment show that investors’ fear is
sharply increasing. Today’s action triggered a CVR III buy signal. Also, the VIX
is near overbought level which means that the market is starting to get
oversold. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) showed similar action as it opened on its lows
and closed near the highs of the day. The action in the VXN also showed
that fear is increasing. The VXN did not trigger any CVR
signals. Fear is increasing in a big way today as the fall of Enron has raised investor’s
fear over corporate accounting issues.

Points of Significance:

Cephalon
(
CEPH |
Quote |
Chart |
News |
PowerRating) dropped 13% and sliced
through its 200-day moving average on over 10 times its average volume. The
shares came under heavy pressure today after an analyst at UBS Warburg released
data that showed that sales of Cephalon’s number one drug, Provigil, fell four
percent for the weak. There is heavy put activity along the front month strikes
including: February 45, 50, 55, 60. There is also heavy activity in the February
55 and 60 calls.

Right Management Consulting
(
RMCI |
Quote |
Chart |
News |
PowerRating) gained
11% on
over four times its average volume. The company reported fourth quarter earnings
that more than doubled in the same period a year ago and beat estimates by four
cents. The international career management and consulting company attributed
their strong performance to the continuing corporate layoffs. Implied volatility
for Right Management is low, which makes option buying suitable.

Macrovision
(
MVSN |
Quote |
Chart |
News |
PowerRating) dropped a little over
seven percent today on average volume. No news was announced, but its options
traded over 10 times their average volume. There is very heavy activity in the
March 30 and 35 calls.

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

Stocks With Biggest Spikes in Implied
Volatility — Stocks with biggest increases or decreases in implied
volatility compared to previous day

Spike Up

Spike Down

Please use stops on every trade!