OPTIONSMART MORNING UPDATE: Gathering momentum

1. OUTLOOK: Tech stocks emerged to trade with considerable strength, thanks to Apple, which posted upside earnings and a strong forecast. Texas Instruments was among the sector's primary laggards; participants sold news of the company's positive earnings surprise after the shares had spiked 2% in the session before the announcement.After the close, Yahoo reported a quarterly profit, reversing a year-ago loss, as the online advertising market showed some signs of life. Shares gained about 2.3% in after-hours trading. QQQQ implied volatility inched lower. The market needs a catalyst to move higher. U.S. futures point to a higher open.

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2. FEAR METER: QQQQ implied volatility slid further  to 22 as investors gain optimism. 

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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