OPTIONSMART MORNING UPDATE: Finished in mixed fashion

1. OUTLOOK: Stocks struggled Wednesday as investors sought more evidence that a recovery is taking hold nd geared up for the big monthly jobs report due Friday. The "Beige Book" confirmed that things are better than they have been. On the Nasdaq, advancers topped decliners by eight to five. FBR Capital raised their target on Amazon.com. QQQQ implied volatility slid further. U.S.futures point to a higher open.

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2. FEAR GAUGE: QQQQ implied volatility slid further as traders dumped protective puts and bet on the uptrend.  

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. WISDOM NUGGETS: Buy on rumors; sell on news.

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