OPTIONSMART MORNING UPDATE: Sunday Edition

1. OUTLOOK: Dell reported weak third-quarter results late Thursday and dragged the tech sector down. The market also is suffering from mixed economic news. However, the declines are surprisingly small considering the market's recent strength. QQQQ implied volatility inched below the 20 mark as bullish sentiment still prevails. Looking ahead, trading is expected to be volatile next week with a busy economic calendar, quarterly results from Hewlett Packard after the closing bell Monday.

.

2. FEAR GAUGE: QQQQ implied volatility slipped to 52-week lows as recovery fears faded away.

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: Investors appear to be more aggressive and impulsive on sell decisions and more conservative on buy decisions.

 5. SPECIAL OFFER: Tap into QQQQ PIcks remarkable win ratio -  97% (118 of 122) winners since 2003! Get a 14% gain per month-long trade! Save 10% on recurring subscriptions by entering coupon code 292E during checkout (expires on November 28, 2009). New subscribers only. Learn more about our services and special offers!