Bad Finish Amid Oil Spill

What a terrible close -- this market just can't put two good days together. Although the VIX finished fractionally lower at 17.28, it was up from the intraday low of 16.07. It would have likely ended higher, but time ran out.

Two retailers tied to disposable income, Best Buy (BBY - commentary - Cramer's Take) and Circuit City ( CC - commentary - Cramer's Take), were notable losers in an otherwise strong retail group.

Oil stocks took it on the chin. The Oil Services HOLDRs (OIH - commentary - Cramer's Take) fell nearly 5% on the day, and puts outpaced calls by nearly 3 to 1. Grabbing the top of the most-active options list was Exxon Mobil (XOM - commentary - Cramer's Take). With shares down over 2%, the June $60 and July $57.50 puts traded over 30,000 and 18,000 contracts, respectively. Implied volatility picked up about 5% across the energy complex.

Shares of Palm (PALM - commentary - Cramer's Take) rebounded some 5%, and although calls were once again more active, put volume actually doubled yesterday's. The fact that the stock held the $16 low did help ease concerns as implied volatility fell by 20% today.

Other implied volatility gainers included L-3 Communications (LLL - commentary - Cramer's Take), which saw shares jump 6% and implied volatility rise 21% on speculation that the death of the company's founder and CEO will lead to a change in control. Well, I would hope so. I guess the real upside would come from a potential sale of the company, not just appointing a new CEO.

Shares of Sears (SHLD - commentary - Cramer's Take) rose 3% to $164, a new 52-week high. But investors took this as a sign that the stock will see an expanded move or price swings, as implied volatility rose 9% on the day.

The IV for H&R Block (HRB - commentary - Cramer's Take) rose 12% higher ahead of the company's fourth-quarter earnings release scheduled for after today's close.

Post-earnings volatility crushes occurred in Cooper Companies (COO - commentary - Cramer's Take), whose premiums fell 22% as the stock dropped 4% on news of reduced earnings guidance, and Veritas (VTS - commentary - Cramer's Take), whose shares fell 13% on disappointing Q3 earnings. Implied volatility for the issue dropped 11%. Here's an example in which the price move far outweighed the decline in implied volatility, meaning it was definitely more profitable to be long options ahead of the earnings report.

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Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.

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