Wednesday’s Options Alerts

  • May 7, 2002
  • TradingMarkets Editors

As expected, the Fed left rates
unchanged at 1.75%. Meanwhile productivity numbers coupled with severely
oversold conditions boosted the markets higher for most of the session. However
the S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and Nasdaq Composite
(
$COMPX |
Quote |
Chart |
News |
PowerRating) sold off
during the final hour of trading to end the day slightly lower. 
Productivity jumped 8.6% in the first quarter beating estimates of a 7% rise.
Labor costs also declined 5.4%, which was the biggest drop since the second
quarter of 1983. For more information on today’s action, please refer to
the market
recap.

The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating)
opened near top lower third of its range and closed slightly under its open. This shift
in intraday sentiment suggests a decrease in fear. The VIX triggered a CVR
I buy signal today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating)
also opened
near their lows and closed slightly above its open. This shift
in intraday sentiment suggests a slight increase in fear. Once again, we
have both CVR III and VI buy signals on the VXN. The VXN is still stretched
pretty far, we could see a bounce in the NDX
(
$NDX.X |
Quote |
Chart |
News |
PowerRating). 

Points of Significance:

Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating) dropped 17% on over triple its average volume.
The shares came under heavy pressure today as Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating) dropped
Broadcom in favor of Texas Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating) to provide chips for their next
generation cable modems. Despite Motorola being one of Broadcom’s biggest
customers, Broadcom’s CFO was quoted that this will have no impact going forward.
Shares of Broadcom sliced through its .786 retracement level from last
September’s lows. 

Grocery distributor Fleming
(
FLM |
Quote |
Chart |
News |
PowerRating)
gained 10% on over four times its average volume. The company reported earnings
that jumped 52% for the same period a year ago. There first quarter income was
also in line with expectations. Fleming also raised guidance for fiscal 2003. There is heavy activity in the
June 25 calls

Ann Taylor Stores
(
ANN |
Quote |
Chart |
News |
PowerRating) jumped 7% on
heavy volume. The shares jumped after Morgan Stanley had some positive comments
about the company and raised the stock to an “overweight” from an
“equal weight” position. However there is heavy activity in
the May 45 puts. 

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 24.57 DOWN
0.31		 CVR
I BUY		 3.54%
Above		 Not
At
Extreme
VXN 50.12 UP
1		 CVR
III, VI BUY		 12.53
% Above		  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
Broadcom BRCM –
17.43		 28185 7380
Mirant MIR –
12.08		 3097 1349
Fleming
Cos.		 FLM +
10.60		 2875 423
Qlogic QLGC –
8.90		 20191 6448
Ann
Taylor Stores		 ANN +
7.32		 3019 345
El
Paso Corp.		 EP –
6.42		 11250 1657

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
Reckson
Associates		 RA 17.4 14.5 35.1 16.8
Lamar
Advertising		 LAMR 40 33.7 54.8 31.3
Pinnancle
West Capital		 PNW 20.2 17.3 25.7 14.2
Waddell
& Reed Financial		 WDR 28.8 24.8 46.2 22.9
Yankee
Candle Company		 YCC 36.9 32 54 29.9
AK
Steel Holdings		 AKS 43.5 37.8 59.4 38.6

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
Fleming
Cos.		 FLM 51.2 62 71.8 50.9
Public
Service Entr.		 PEG 16.1 19.3 30.3 15.3
Entergy
Corp.		 ETR 18.9 22.1 30.9 19.6
Lennox
International		 LII 25.3 29.1 44.9 27.5
Bunge
Limited		 BG 24.7 27.4 46.8 24.1
Sherwin-Williams SHW 31.2 34.3 41.9 30.6

Please use stops on every trade!