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Strategies & Market Trends : Ahh Canada - 2 out of 3 ain't bad -- Ignore unavailable to you. Want to Upgrade?

To: Shack who wrote (1245)	3/17/2001 6:36:29 PM
From: Dexter Lives On	Respond to of 5144

Shaw/Shack, VIX relates to the S&P 100. The price of the options spike (or flatten) based on market players' short term buying and selling trends in short options (they use a basket of 8 near at-the-money 30 day S&P100 options to measure VIX). So if you're writing options and you notice urgency in players' trading patterns, you raise your "implied volatility" in calculating prices you will sell options for. Thus unstable markets bring about high implied volatility which kicks up options prices. It's an accurate measure of calm vs. panic in the marketplace; the same concepts apply to VXN but it relates to the Nas 100. So options' implied volatilities can be a "very short-term" leading indicator on stock price movement and make a good measuring stick for bearish/bullish sentiment. Both VIX and VXN are discussed at cboe.com Rob As Shack points out, the techs are close to some kind of bottom; sadly not so for the rest of the market.

To: Shack who wrote (1245)	3/18/2001 1:27:01 PM
From: Shaw	Respond to of 5144

Thanks Shack. I guess we have to get a little higher on the VIX then. Good point fear vs. greed. I still havent seen daytrading opportunities on the short and bounce side like were displayed in April '00. Eventhough the VIX/VXN has approached those levels. I guess it may not happen like that again (since there are no CIC's and RMBS's to drop from 150 to 100 or 250 to 200 in a day, they're all so beat up), but some individual issues are showing signs, imo, of similar percentage losses exemplified by bid hitting regardless of MD. I watch the VIX vs. the VXN because I always thought panic would have to show up there to signal some sort of bottom. The NASDAQ is so..... NASDAQ <g>.