Wednesday’s Options Alerts
After yesterday’s plunge to the
downside, the markets gave us a roller coaster ride today. The major
averages ended mixed today as the Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating) gained almost 1% while
the S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) ended virtually unchanged and the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
slipped a little bit. Greenspan had some neutral to slightly positive comments
about the economy. Greenspan basically said that the worst is probably over, but
the economy will not match the first-quarter growth rate. Semiconductor and
software issues were the best performers today. Networking, healthcare,
telecoms, and gold were all laggards. For more information on today’s action, please refer to
the market
recap.
Fear is continuing to increase in the
market as the VIX hit a 3.5 month high. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up and opened
near the midpoint of its range and closed just underneath its open. This shift
in intraday sentiment does show a slight decrease in fear. Today’s action
triggered a CVR
I buy as well as another CVR 3
buy signals. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near the lower third of its
range closed near the highs of the day. This shift in intraday sentiment shows a increase in
fear. No CVR signals were triggered by the VXN today. Despite increasing fear,
tech stocks rallied slightly today. This market is oversold so at least we could
see more of a bounce or short covering rally.
Points of Significance:
Activision
(
ATVI |
Quote |
Chart |
News |
PowerRating) gained over 7% on
more than double its average volume. The shares jumped today as the number-two
video game publisher raised guidance for its current quarter due to strong
international sales. Activision’s “Spider Man” games were also recent
top sellers. The shares are trading in an upward sloping channel and could possibly
run to the 36 level before encountering resistance. Activision’s implied
volatility is somewhat low, that could warrant call buying.
Peoplesoft
(
PSFT |
Quote |
Chart |
News |
PowerRating) gained 5% on
about average volume. The stock has been stuck in a 2 point trading range for
the past two weeks. It is also trading in a descending triangle. Despite a small
bump up today, software issues are on the verge of resuming their strong
downtrend. There is heavy activity in the July 17.50 puts.
America Online
(
AOL |
Quote |
Chart |
News |
PowerRating) dropped
almost 5% on heavy volume. The stock was hit today after Lehman Brothers cut its
2002 revenue and earnings forecast due to declining online ad revenue. AOL
gapped down today and is closing in on its 52 week low.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 26.94 | UP 1.24 |
CVR 1, 3 BUY |
17.28 % Above |
At Extreme |
| VXN | 49.66 | UP 2.01 |
NONE | 8.90 % Above |
Near Extreme |
Abnormal Options Volume With Price Movement
—
Abnormal options volume (calls and puts) with stock price movement
| Name | Symbol | Net % Change |
Volume | Avg. Volume |
| Check Point Software |
CHKP | + 8.20 |
9274 | 2858 |
| Activision | ATVI | + 7.21 |
1170 | 204 |
| Autonation | AN | – 6.68 |
9241 | 1162 |
| L-3 Communications |
LLL | – 5.17 |
2263 | 346 |
| Peoplesoft | PSFT | + 5.44 |
5970 | 1618 |
| America Online |
AOL | – 4.91 |
70780 | 16172 |
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 |
| Financial Sector SPDRs |
XLF | 20.8 | 14.7 | 26.2 | 13.6 |
| Magna International |
MGA | 26.2 | 21 | 31.9 | 23.5 |
| Tower Automotive |
TWR | 53.3 | 44.6 | 61.2 | 37.4 |
| Oak Technology |
OAKT | 69.9 | 59.2 | 71.5 | 56.5 |
| Abott Labs |
ABT | 34.9 | 29.8 | 29.4 | 19.2 |
| L-3 Communications |
LLL | 44.6 | 39.8 | 46.4 | 30.2 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Johnson Controls |
JCI | 30.6 | 35.4 | 30.5 | 23 |
| El Paso Corp. |
EP | 75.2 | 85.4 | 63.9 | 21.2 |
| First Energy |
FE | 20.4 | 22.8 | 28.2 | 20.7 |
| Pets Mart |
PETM | 45.9 | 51.3 | 51.1 | 37.5 |
| Winconsin Energy |
WEC | 16.2 | 18.1 | 22.9 | 17.1 |
Please use stops on every trade!