Wednesday’s Options Alerts

  • February 18, 2003
  • Chris Tyler

It’s simply amazing what can
happen in an oversold market. Two
sessions after our last report and the ensuing technical bounce has quickly
negated any oversold market condition in the ETFs, as investors are once again
chomping on the bit from the buy side. A snow storm put any terrorist activity
on “ice” over on the East Coast, and on the West Coast, duct tape
quickly went out of style, as investors decided there was more security in
buying securities, rather than securing the home from terrorist
attacks.  

The VIX and VXN are both at respective daily
chart supports. Neither is registering any signals as of the close of trade, but
the VIX should find support at its prior resistance levels, and the VXN, which
has been badly lagging, has support in the form of an uptrend line drawn in from
the lows. When we last left off, I was expecting more than a half session
technical bounce, and by golly, we got two trend days higher. Not too bad, but
let’s remember whose den we’re in (da’ bears), and if we happen to hear some
loud quacking, it’s always polite to feed the ducks. And it goes without saying,
but I always feel it’s appropriate to rehash the three cardinal rules for trade
execution: spread (to stay spread is to stay alive), price (price matters), and
volume (and as everyone knows…size matters too). 

Points of Significance:

Volatility
Index		 Close Net
Change		 Signals/Direction %
Above/Below 10 Day Moving Average		 Significance
VIX 35.56 Down
-1.54		        None 5.39%
Below 		Not
at Extreme
VXN 48.40 Up +.33       
None		 .30% Above Not
at Extreme

 

Abnormal Options Volume — This list
includes both percentage movers that are normally associated with an increase in
options activity, as well as stocks that have unusually high activity and / or
technical situations,
reflecting increased speculation of a potential price move.

Name Symbol Net
% Change		 Volume Avg.
Volume
UT
Starcom 
UTSI		       
0%		 3141 957
Teva Pharmaceutical
TEVA		        +3% 5212 1783
Storage Technology
STK		        +3% 2042 342
Semiconductor HOLDR SMH        +4% 38598 12449

 

Stocks With Spikes in Implied
Volatility — Stocks with Increases and Decreases in implied
volatility compared to previous day. Candidates are then screened qualitatively.
These lists represent those issues that carry a blend of liquidity and/or
technical setups that might deserve further notice. 

Spike Up

None Today.

Spike Down

Name Symbol IV Previous
IV		 High
IV		 Low
IV
Webex
Communications
WEBX		 72.4 81 112.6 77.7
Charles
River Labs
CRL		 32 35 58 34.7

 

Please use stops on every trade!