OPTIONSMART MORNING UPDATE: Struggled to find a bottom

1. OUTLOOK: The Dow closed below 10,000, as worries about the European debt weighed on investor sentiment. A number of tech stocks gained, including Hewlett-Packard, Intel, Google and Cisco. Electronics Arts will be in focus Tuesday morning. The video game company's shares fell sharply after it warned its 2011 earnings would miss analysts' forecasts.  U.S.futures point to a higher open.

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2. FEAR METER: QQQQ implied volatility erased intra-day fears and finished little changed.  

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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