Stock indices have moved steadily up from the recent lows, reinforcing the notion the market has put in a bottom. We seem to have avoided crashing through support (which would have led to the next new leg down). But I'm not ready to buy into this recent bounce as anything more a rally from an oversold condition.
Breadth and volume were not as impressive as one might expect for a sustainable rally. And despite today's rally, option gauges such as the VIX dipped only 3% to 25.80 and the put/call ratio only fell back in line with its 0.87 20-day moving average. Translation: They have not reversed their upward trend and are not providing longer-term buy signals.
As I mentioned last week, the S&P 500 Index is likely to be range-bound in the 1300-1380 area. Using the Spyder Trust (SPY - commentary - Cramer's Take) quarterly options to sell a strangle remains a suggested profitable move.
Names topping the most active option list included the satellite radio twins XMSR (XMSR - commentary - Cramer's Take) and Sirius (SIRI - commentary - Cramer's Take), as the two companies appear closer, if belatedly, to finally getting permission from the FCC to get hitched.
Steven Smith Blog Choppy Waters Ahead 3/20/2008 9:35 AM EDT Options in the financials and commodites should see brisk trading today.
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.To read more of Steve Smith's options ideas take a free trial to TheStreet.com Options Alerts.
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