Wednesday’s Options Alerts
The fourth quarter
starts off with a bang as the major averages soared in the face of more negative economic
data. After yesterday’s
comeback off the disappointing Chicago PMI numbers, the major indices shed the
bulk of their losses after
a slip in the September ISM index. The September ISM index slid to 49.5% from
50.5% in August. This marks the second time this year that the index has been
below 50. Readings under 50 represent a contraction in the manufacturing sector.
At the
close, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) sprinted 346.86 points or 4.56%. The S&P
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) jumped
32.64 points or 4%! The Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating), which was down earlier in the
session, jumped 41.51 points or 3.54%. Strongest sectors for today included
chemicals [$CEX.X|$CEX.X[ up 7.41%, computer technology
(
$XCI.X |
Quote |
Chart |
News |
PowerRating) up
5.56%, telecoms
(
$XTC.X |
Quote |
Chart |
News |
PowerRating) up 5.29%, insurance
(
$IUX.X |
Quote |
Chart |
News |
PowerRating) up 4.94%,
and semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) up 4.89%. Meanwhile weakest performers were
defensive sectors such as gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) down 3.03%, health care providers
[$RXH.X$RXH.X] down 2.74%, and REITs
(
$DJR.X |
Quote |
Chart |
News |
PowerRating) down 0.37%.
Yesterday’s
comeback after the Chicago PMI was certainly a positive sign and today’s huge
rally definitely adds fuel to the fire. In more good news, Dell
(
DELL |
Quote |
Chart |
News |
PowerRating) said
that their third quarter results will beat estimates, perhaps this rally has
more room to go. In more economic news, construction spending for August fell
0.4%, more than the 0.1% drop expected by economists. Lastly, Challenger, Gray,
and Christmas announced that layoffs in September fell to a 22 month low.
Volatility took a beating today. The VIX
(
$VIX.X |
Quote |
Chart |
News |
PowerRating) opened near the highs
of the day closed
near its lows. This shift in intraday sentiment
shows a big drop. No CVR signals were triggered today. The VXN
(
$VXN.X |
Quote |
Chart |
News |
PowerRating) opened
near its highs and closed near the lows of the day. This shift
in intraday sentiment shows a drop in fear. The VXN triggered a CVR
I buy signal today.
Points of Significance:
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 40.13 |
DOWN 4.53 |
NONE |
7.13% Below |
Not At Extreme |
| VXN | 57.24 |
DOWN 1.85 |
CVR I Buy |
7.69% 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 |
| Forest Labs |
FRX |
7.84 |
5010 |
1331 |
| Activision |
ATVI |
– 7.56 |
2879 |
436 |
| 3M |
MMM |
+ 5.73 |
10069 |
3828 |
| Hot Topic |
HOTT |
– 5.65 |
982 |
226 |
| Pacific Sunwear |
PSUN |
– 5.45 |
2884 |
524 |
| Wal-Mart |
WMT |
+ 5.01 |
35268 |
9328 |
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 |
|
Golden State Bancorp
|
GSB |
24.3 |
18.8 |
35.1 |
10.3 |
| Texas Utilities |
TXU |
48.6 |
40.8 |
61.6 |
17.3 |
| Unilab |
ULAB |
62.5 |
54.6 |
76.5 |
29.1 |
| Pacific Sunwear |
PSUN |
67.3 |
58.8 |
74.8 |
51.2 |
| Reebok |
RBK |
53.4 |
46.8 |
50.1 |
32.7 |
| Abercrombie & Fitch |
ANF |
72.1 |
63.5 |
87.9 |
43.5 |
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Annaly Mortgage |
NLY |
39.8 |
50.3 |
57.7 |
36.1 |
| Exxon Mobil |
XOM |
37 |
44 |
46.7 |
20.7 |
| Federal National Mortgage |
FNM |
47.9 |
56.8 |
48.1 |
18.2 |
| Wal-Mart |
WMT |
40.9 |
47.9 |
48 |
24 |
| Verizon Communications |
VZ |
52.2 |
59.7 |
67.6 |
28.6 |
| Walgreen |
WAG |
41.3 |
46.3 |
45.3 |
19.4 |
Please use stops on every trade!