OPTIONSMART MORNING UPDATE: Extended gains in thin trading

1. OUTLOOK: Stocks rose for a third day after two economic reports continued to fuel optimism. The WSJ reported that CBS and Disney are considering participating in Apple's plan to offer television subscriptions over the Internet. QQQQ implied volatility slipped to record lows. The tone should remain subdued for the rest of the holiday-shortened week.  US futures point to a higher open. 

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2. FEAR GAUGE: QQQQ implied volatility slipped to record lows.  

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.

4. TAKE ADVANTAGE OF OUR QQQQ ENHANCED PORTFOLIO

OUR YESTERDAY'S TRADE:

QQQQ Feb 42/44 Debit Call Spread: Sold @1.54 with a 10% gain in 6 days!

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