Wednesday’s Options Alerts
Technology led the
general market averages higher throughout most of the trading session
coming on the heels of some very welcome positive news from Vodafone, Dell, Mot,
and Oracle. Late in the session the markets reversed much of the early
upside action, but all the averages did manage to post gains on the day. The
afternoon sell off wasn’t really attributable to any specific news other
than Philip Morris
(
MO |
Quote |
Chart |
News |
PowerRating) feeling less than confident about future growth
expectations.
In this market, even after three solid sessions of selling that technically put
the indices firmly back into their multi week trading ranges, it seems that
investors are still very quick to book profits and ask questions later.
Underneath the intraday volatility, the fact remained that the indices,
especially the Nasdaq
(
$COMP |
Quote |
Chart |
News |
PowerRating), up 2.3%, enjoyed a nice day of strong
buyside interest. Up volume over down volume came in roughly 9:1, although on
the day, volume as a whole was moderate.
The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
reflected widespread gains as it was up over .76% of a percentage point, while
the Dow Industrials, which can be heavily burdened by a few bad apples got
“burned” by Philip Morris. Despite the fact that MO was down nearly 6
points, even the Dow Jones Industrials
(
$INDU |
Quote |
Chart |
News |
PowerRating) hung on for a .32% gain.
The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) and the VXN
(
$VXN |
Quote |
Chart |
News |
PowerRating) both opened and closed in the
upper part of their respective ranges, though neither triggered any CVR signals.
Of technical importance is the fact that both of these volatility indices are
coiling up into relatively tight trading ranges on their daily charts.
Volatility levels, quite often, much like price charts, can be graphed out and
interpreted in the same manner.
What this suggests is that prices are currently
consolidating, and the longer this process takes to resolve itself, the more
explosive the move. The consolidation in the volatility indices isn’t predicting
which direction both equity and volatility prices will move (and usually they
move inversely i.e., prices up, volatility down ), but they are alerting market
participants to an impending move away from our current trading range.
Points of Significance:
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 35.39 |
DOWN .72 |
NONE | 1.25% Above |
Not At Extreme |
| VXN | 55.25 | DOWN .46 | NONE |
6.0% 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 |
| Enzon | ENZN |
+ 6.0 |
6688 | 404 |
| Southern Company | SO |
– 8.0 | 16876 | 1647 |
| Newmont Mining |
NEM |
– 5.0 |
16843 | 3114 |
| Philip Morris | MO |
– 14.0 | 72777 | 10310 |
| JC Penney |
JCP |
– 13.0 |
4599 | 1660 |
| Healthcare | HCA |
+ 4.0 | 11837 | 4586 |
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 |
|
Southern Company |
SO |
54.6 | 36.3 | 47.3 | 17.5 |
| Philip Morris |
MO |
46.6 | 33.3 | 51.0 | 19.4 |
| Community Health Systems |
CYH |
61.1 | 53.2 | 57.0 | 35.8 |
| FPL Group |
FPL |
45.1 | 40.0 | 50.6 | 17.6 |
| H & R Block | HRB |
71.3 | 64.1 | 64.2 | 31.4 |
| American Water Works |
AWK |
15.2 | 11.9 | 17.1 | 7.3 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
|
Tenet Healthcare
|
THC |
89.6 | 103.6 | 86.1 | 22.3 |
| Neoware Systems |
NWRE |
80.7 | 93.1 | 108.0 | 78.8 |
Please use stops on every trade!