OPTIONSMART MORNING UPDATE: Running out of gas

1. OUTLOOK: Despite plenty of potential positive news, the market lacked direction for the second straight session. Telecom was the worst performing sector this session, though. It dropped 3.0% as integrated telecom fell 3.3%. Thomas Weisel raised its target on Google to $650 from $620. ThinkEquity raised their target on Micron. The technical chart looks neutral. QQQQ's implied volatility remains on extremely low levels.

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2. FEAR METER: QQQQ implied volatility remained on very low levels.  

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: Do not be too curious about the reasons behind the moves.

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