OPTIONSMART MORNING UPDATE: Dragged on jitters

1. OUTLOOK: The tech sector dragged on jitters ahead of Friday's big government jobs report. Sony said flat-screen televisions, electronic readers and Blu-ray video players helped its U.S. holiday season sales top expectations. Merriman raising its estimates on Google. Netflix announced agreements with five global consumer electronics companies that will introduce Netflix ready devices later this year. The tech sector needs more catalysts to resume rally.

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2. FEAR METER: QQQQ implied volatility little changed.  

About Implied Volatility.  Investor fear and greed play a significant role in financial markets. The question is, how can investors measure market sentiment in an emerging market situation? How can they gauge the fear? Volatility is a well-known measure of risk in financial markets. When volatility is low, there is a lack of fear. High volatility, however, suggests a fearful markets. Volatility can be calculated in two ways. Either from historical stock price data or from current option price data. Using the second method results in an implied volatility measure. It is a reflection of fear and greed amongst a wide group of market professionals. It’s not wise to ignore this parameter.

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