Wednesday’s Options Alerts
After two days of stellar gains, the markets ended
mixed. The Dow gave back some of its gains, but the Nasdaq rose modestly
higher. On the economic front, the number of layoffs in February fell to the
lowest level since last June. The non-manufacturing index, a measure of business
activity in the service sector, rose to 58.7%, higher than the expected
52.25. An upgrade of Intel
(
INTC |
Quote |
Chart |
News |
PowerRating) boosted the chip stocks and the Nasdaq
today.
For more information on today’s action, please refer to
the market
recap.
The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) gapped up and
opened near its mid-point and closed in the lower third of its range. This shift in intraday sentiment
today suggests that fear is still dropping. No CVR signals were triggered, but
the VIX is still oversold (i.e., market is overbought), thus we are close to
setting up a CVR II sell signal. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened near its high and
closed slightly below its open. This intraday shift in sentiment suggests fear is
increasing. Following yesterday’s CVR III and VI sell signals, we triggered a
CVR II and CVR V sell signals today.. Both volatility indices are still near
their summer lows and in dangerous territory. Lighten up on long positions or
use cheap puts for protection.
Points of Significance:
Shares of warehouse retailer Costco
(
COST |
Quote |
Chart |
News |
PowerRating)
dropped almost 5% on five times its average volume today. The company reported
second quarter earnings that rose 7% and matched expectations. However the
company gave a more cautious outlook for the next two quarters. The shares
gapped up but later reversed. Costco did manage to find support at its .50
retracement level from last September’s lows.
Biomet
(
BMET |
Quote |
Chart |
News |
PowerRating) dropped 5% today on
triple its average volume. The shares came under pressure today as the company
received a warning from the FDA regard the sterility of its implant devices.
Sandisk
(
SNDK |
Quote |
Chart |
News |
PowerRating) jumped 13% on
double its average volume. The company was upgraded by Morgan Stanley to
“Outperform” form “Neutral”. Morgan also raises their
estimates for 2002 and 2003.
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 21.90 | DOWN 0.18 |
NONE | 6.37 % Below |
Not at Extreme |
| VXN | 42.29 | UP 1.50 |
CVR II, V SELL |
5.88% 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 |
| Sandisk | SNDK | + 13.03 |
1570 | 766 |
| Bed Bath & Beyond |
BBBY | – 6.51 |
2551 | 1168 |
| Shaw Group |
SGR | + 6.30 |
2363 | 630 |
| Integrated Device Tech. |
IDTI | + 5.73 |
4582 | 1642 |
| Biomet | BMET | – 5.34 |
3291 | 916 |
| Costco Wholesale |
COST | – 4.75 |
9592 | 3358 |
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 |
| Cummins Engine |
CUM | 32.5 | 25.2 | 44 | 28.8 |
| Expedia | EXPE | 92.3 | 73.3 | 100.2 | 44.7 |
| AT&T Canada |
ATTC | 38.6 | 52 | 70.2 | 12.2 |
| Bristol Myers Squibb |
BMY | 33.2 | 26.4 | 49.9 | 26.5 |
| Tetra Tech Inc. |
TTEK | 55.3 | 44.1 | 59.5 | 46.9 |
| IDEC Pharmaceuticals |
IDPH | 49.3 | 42.9 | 82.8 | 47.1 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Thoratec Labs |
THOR | 82.8 | 119.5 | 83.2 | 49.6 |
| Novartis AG |
NVS | 18.3 | 25.1 | 34.4 | 22.1 |
| Industrial Sector SPDR |
XLI | 27.1 | 33.5 | 42.3 | 23.9 |
| Iron Mountain |
IRM | 28 | 33.6 | 43.6 | 28.1 |
| CMS Energy |
CMS | 30.6 | 35.6 | 47.7 | 26.3 |
| Republic Services |
RSG | 30.7 | 35.1 | 41.3 | 31 |
Please use stops on every trade!