OPTIONSMART MORNING UPDATE: In rally mode

1. OUTLOOK: Investors cheered a combination of analyst upgrades and corporate deal-making. Tech stocks advanced after Barclays Capital upgraded Intel. Shares of the semiconductor giant rose 2.4%. Many market players take the entire week off, which means the trading volume is low, and relatively small moves could cause major volatility. At the same time, with the major indexes on track to post double-digit percentage gains for the year, many money managers have closed their books. QQQQ implied volatility plunged to record lows as bullish sentiment prevailed. US futures point to a higher open. 

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2. FEAR GAUGE: QQQQ implied volatility plunged 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 TRADES:

QQQQ Feb 41/43 Debit Call Spread: Sold @1.58 with a 10.6% gain in 17 days!

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