OPTIONSMART MORNING UPDATE: Plunged on global jitters

1. OUTLOOK: Stiff selling on heavy volume came as the greenback spiked against foreign currencies. After the market close Thursday, Oracle reported a profit of 39 cents a share versus 34 cents a year ago. The software company's results beat analyst expectations of 36 cents per share. Smartphone maker Palm reported a wider-than-expected loss of 37 cents per share in its second fiscal quarter. Palm's rival, Blackberry maker Research in Motion, earned $1.10 per share, up from 69 cents a year ago. RIM shares were up about 11% in after-hours trading. QQQQ implied volatility inched higher in thin trading session. U.S.futures point to a higher open.

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2. FEAR GAUGE: QQQQ implied volatility slipped on global economic jitters.

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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