Wednesday’s Options Alerts
The smashing continued
today in the major averages as buyers were nowhere in sight. The Dow turned a
110 point gain into an 80 point loss. The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) dropped 20
points or 2.5% to close under 800, for the first time since May 1997. And after
having been the better-performing index over the last couple of weeks on a
relative basis, the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) dropped 54 points, or 4.18%. Of course
we are now in even more oversold conditions and the bounce that everyone was
waiting for still has not happened. Not even the rise in the dollar today was much
help as nearly every sector was in the red.
The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped lower,
opened near its lows, and closed in the top third of its range. This shift
in intraday sentiment again shows fear increasing. We have repeat CVR 3 and 6
buy signals for today. Fear is very close to its September 2001 highs. But has
capitulation run its course? The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) gapped higher, opened near its
lows,
and closed in the lower half of its range. This shift in intraday sentiment
also shows an increase in fear. The VXN didn’t trigger any signals today.
Points of Significance:
J.P. Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating) and Citigroup continued their decent on high volume. The
two Dow components tumbled again on investigations into their role in the Enron
scandal. Avoid purchasing outright options as implied volatility is very high,
instead use bear or calendar spreads.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 50.60 |
UP 2.37 |
CVR 3 and 6 Buy |
20.67% Above |
Not At Extreme |
| VXN | 65.20 |
UP 2.62 |
NONE |
0.001 % 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 |
| J.P. Morgan |
JPM |
– 18.10 |
86659 |
18836 |
| Clear Channel Communications |
CCU |
– 16.49 |
19078 |
8625 |
| Citigroup |
C |
– 15.73 |
126241 |
33204 |
| Allied Capital |
ALD |
– 15.62 |
9965 |
2385 |
| Shaw Group |
SGR |
– 12.78 |
3120 |
662 |
| Barrick Gold |
ABX |
– 11 |
13237 |
3651 |
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 |
| Hibernia Corp. |
HIB |
41.6 |
27.2 |
32.8 |
20.4 |
| Allied Corp. |
ALD |
84.6 |
58 |
75.7 |
27.2 |
| Federated Investors |
FII |
53 |
38.2 |
32.2 |
24.5 |
| Nicor |
GAS |
102.1 |
76.2 |
36.3 |
17.7 |
| PEC Solutions |
PECS |
105.7 |
80.2 |
85.1 |
65 |
| Harmony Gold |
HGMCY |
106.7 |
82.6 |
90.6 |
60.5 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Johnson & Johnson |
JNJ |
43.5 |
57.3 |
41.9 |
18.1 |
Please use stops on every trade!