Tuesday’s Options Alerts

• January 14, 2002
• TradingMarkets Editors

Stocks started the week off on the downside after
Friday’s remarks from Fed Chariman Greenspan. Stocks also felt some
downside pressure after Merrill Lynch’s chief strategist Richard Bernstein
lowered his equity allocation to 50% from 60%. For more information
on today’s action, please
refer to the market
recap. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened and closed in the upper half of its
range.
This intra-day shift in sentiment
suggests that fear is increasing. No new CVR signals were triggered today.
However the VIX is becoming overbought, which means that the market is getting
oversold. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)
opened and closed in the lower-third of its range. This intra-day shift in sentiment also
suggests that fear is rising. The VXN triggered a CVR V buy signal today.

Points of Significance:

OSI Systems
(
OSIS |
Quote |
Chart |
News |
PowerRating) show good relative
strength and jumped over 17% on almost triple its average volume. The company
announced today that its second quarter earnings will beat Wall Street expectations.
Its options traded over twelve times their average volume. There is heavy call
activity across the board.

Ess Technology
(
ESST |
Quote |
Chart |
News |
PowerRating) dropped 10% on almost
double its average
volume. No specific news was cited. The stock did break below an uptrend line
going back to its September lows. Options on Ess Technology traded over double
their average volume today. Its
implied volatility is low, thus making option purchases suitable. Look for long volatility strategies such as
backspreads and outright option purchases.

United Rentals
(
URI |
Quote |
Chart |
News |
PowerRating) dropped 10% on five times its average volume.
Salomon Smith Barney downgraded the stock to “neutral.” They also cut
their 2002 earnings estimates to $1.48 from $1.86, citing weakening industry
fundamentals. Its implied volatility is somewhat high. Look
for short volatility strategies.

Implied volatilities for Timberland
(
TBL |
Quote |
Chart |
News |
PowerRating) and
Triton PCS Holdings
(
TPC |
Quote |
Chart |
News |
PowerRating) are approaching the high side. Keep an eye out of
short volatility strategies.

A number of Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) and
(
$SPX |
Quote |
Chart |
News |
PowerRating)
will be reporting earnings this week, they include: Intel
(
INTC |
Quote |
Chart |
News |
PowerRating), J.P.
Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating), IBM
(
IBM |
Quote |
Chart |
News |
PowerRating), Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating), General Motors
(
GM |
Quote |
Chart |
News |
PowerRating),
Citigroup
(
C |
Quote |
Chart |
News |
PowerRating), and United Technologies
(
UTX |
Quote |
Chart |
News |
PowerRating).

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!