Wednesday’s Options Alerts

  • August 13, 2002
  • TradingMarkets Editors

As expected, the
Fed left the Fed funds rate at the 40-year low of 1.75%, but has now adopted an easing bias from its previous neutral stance,
acknowledging that
the economy is leaning towards the weaker side. 

Today’s
trading started out on a moderately bullish note following the positive economic
report. Retail sales for July rose 1.2% as expected. However excluding auto
sales, they came rose 0.2% vs. expectations of a 0.3% increase. Volatility
certainly picked up following the announcement as traders were still deciding on
the impact of the news. Then, a final-hour sell-off drove the indices to
close near the lows of the day. 

The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) dropped 206 points or
2.37%. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
dropped almost 20 points or 2.16% to close near its 10-day moving average and
the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) dropped 37 points or 2.87%. Retailers
(
$RLX.X |
Quote |
Chart |
News |
PowerRating)
were up almost 4% and one point, but backed off and only squeaked out a gain of
0.17% at the close. It also left a bearish tail for the day. 

Otherwise, gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating)
up 0.45%, was the only other sector in the green today. Today’s weak close and
the indices’ inability to close above their recent double top leaves the indices
vulnerable to further downside action.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped
up, opened near
its highs, and closed just above the midpoint of its range. This shift
in intraday sentiment still suggests a small decrease in fear.
No CVRs were
triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) also gapped up opened near its highs and closed
right above its open. This shift
in intraday sentiment shows a rise in fear. The VXN triggered CVR 1
and 5 sell signals.

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 39.80
 		DOWN 0.66
 		NONE
 		5.15
% Below
 		Not at Extreme
VXN 57.68
 		UP 1.39
 		CVR 1, 5
SELL
 		6.39 % 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
Concord EFS
 		CEFT

 + 10.33
 		7055
 		2048
Deere
 		DE

 + 9.94
 		2092
 		661
Express Scripts
 		ESRX

 – 9.56
 		3211
 		784
Rockwell Collins
 		COL

 – 8.54
 		675
 		141
Boeing
 		BA

 – 8.07
 		11203
 		3854
Enzon
 		ENZN

 – 4.44
 		4503
 		2128

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
American Capital Strategies
 		ACAS

 58.7
 		40.5
 		48.8
 		22.4
PepsiAmericas
 		PAS

 34.2
 		25
 		33.5
 		26
American Water Works
 		AWK

 18.1
 		13.9
 		15.9
 		8.7
Financial Sector HOLDRs
 		XLF

 35.9
 		28.9
 		37
 		13.6
AFC Enterprises
 		AFCE

 64.6
 		53.2
 		55.5
 		37.5
Express Scripts
 		ESRX

 63.6
 		52.9
 		62.8
 		30.4

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
McAfee.com
 		MCAF

 52
 		92.9
 		94.6
 		62.8
Telecom Brasil
 		TBH

 56.5
 		75.4
 		73
 		43
Kinder Morgan Management
 		KMR

 36.5
 		46.2
 		47.9
 		25.8
Enzon
 		ENZN

 64.4
 		79.4
 		102.9
 		54.8
Prologis Trust
 		PLD

 26.9
 		32.8
 		30.3
 		24.9
Concord EFS
 		CEFT

 83.8
 		69.1
 		75.5
 		31.5

Please use stops on every trade!