Wednesday’s Options Alerts

  • September 24, 2002
  • TradingMarkets Editors

It was a
rocky day as warnings from Weyerhaeuser
(
WY |
Quote |
Chart |
News |
PowerRating) and Rohm and Haas
(
ROH |
Quote |
Chart |
News |
PowerRating),
along with an earnings shortfall from Lehman Brothers
(
LEH |
Quote |
Chart |
News |
PowerRating) and more accounting
trouble from Xerox
(
XRX |
Quote |
Chart |
News |
PowerRating) weighed heavily on the market from the start. A
slightly better-than-expected September consumer confidence number inspired a
small blip up but the sell off continued after the Fed left rates unchanged
at 1.75%. 

Despite many attempts to push higher, both the Dow and S&P closed
near the lows of the day while the Nasdaq managed to shrug off its lows after
digging deeper into its six-year lows. At the
close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) dropped 188.95 points or 2.40%, the index also broke to a
four-year low on a closing basis. The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) lost
14.43 points or 1.73% closing just above its 78.6% retracement at 816.19. The Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) displayed some relative strength today
despite bearish comments from Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating). The Naz gave up 2.65
points or 0.22% after falling 15 points earlier in the session. 

Gold stocks
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) up
2.77%, biotechs
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) up 2.06%, and semis
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) were the best performing sectors
of the day. Many biotech and semiconductor issues put in wide range key reversal
bars. Airlines
(
$XAL.X |
Quote |
Chart |
News |
PowerRating) down 7.15% and paper
(
$FPP.X |
Quote |
Chart |
News |
PowerRating) down 6.29%
were the worst performing sectors of the day. 

For the
fourth straight month consumer confidence declined. Consumer confidence for
September declined to 93.3, but better than the expected 92.3 reading. As
expected, the Fed left rates unchanged at the 40-year low of 1.75% along with an
easing bias. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up, opened near
its highs and closed near its midpoint. This shift in intraday sentiment
shows a drop in fear. Today’s action triggered a CVR
1 buy signal today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) gapped
up, opened
near its highs and closed near near the lows of the day. This shift
in intraday sentiment also shows a rise in fear. Though the Vixen
didn’t trigger any signals. We continue to head deeper into oversold territories
and a bounce could be upon us any day. However volatility is still quite high to
warrant outright option buying.

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 45.38
 		UP 0.67
 		CVR
I BUY

 7.71% Above
 		Not At Extreme
VXN 59.40
 		DOWN 0.45
 		NONE
 		1.55% Above
 		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
OSI Pharmaceuticals
 		OSIP

 + 27.80
 		5669
 		459
Computer
Sciences
 		CSC

 – 13.99
 		809
 		176
General Motors
 		GM

 – 8.20
 		16747
 		8257
Lexmark
International
 		LXK

 + 8.14
 		2986
 		945
International Paper
 		IP

 – 6.47
 		13423
 		2763
IBM
 		IBM

 – 5.71
 		81762
 		25753

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
PennzEnergy
 		PZL

 14.3
 		10.8
 		43.2
 		12.9
Electronic Data Systems
 		EDS

 115.5
 		88.7
 		87.9
 		32.3
Allegheny Energy
 		AYE

 66.6
 		56.9
 		57.3
 		27.4
General Motors
 		GM

 66.6
 		56.9
 		57.3
 		27.4
Echostar Communication
 		DISH

 76.9
 		67
 		88.1
 		41
Constellation Brands
 		STZ

 56.2
 		49
 		44.8
 		25.6

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
OSI Pharmaceuticals
 		OSIP

 104.4
 		119.5
 		107.7
 		50.1
Amgen
 		AMGN

 52.9
 		59.9
 		73.3
 		30.7
NPS Pharmaceuticals
 		NPSP

 73
 		81.2
 		140.9
 		51.7
Unilab
 		ULAB

 62.9
 		69.1
 		76.5
 		29.1
Roadway Express
 		ROAD

 57.5
 		62.6
 		56.1
 		38

Please use stops on every trade!