This is for you gurus

Posted by stoicathos on August 18, 2011 (12:42PM)

What effect, if any, will options expiration this weekend have on the market?


Can we expect some positive pressure tomorrow as option traders close their short stock positions that were covering the puts (now in the money) they sold?

Posted by OldFart on August 18, 2011 (01:06PM)

I am not a guru, si I do not know. The largest open interest of SPX options is at 1150 and the interesting part is that these options expire tomorrow morning

Posted by spshapiro on August 18, 2011 (02:07PM)

Normally, as expiration approaches stocks ‘migrate’ towards the strike price of the highest open interest of the front month, but this is not what might be called ‘normal times’.  With pricing moving 4-5% in a day, it is easy to see a position move right through a strike, no matter the open interest.  I’m looking at BA right now which has falling through 2 strikes just this morning. 

Posted by TK All-Star on August 31, 2011 (04:24PM)

Stoicathos: Apologies for responding so late to your question here, but I came across this recently and thought it might make a good premise for an All-Stars post. Check it out here:

http://community.tradeking.com/members/tk-all-star/blogs/88070-the-complex-dance-between-short-stock-and-short-puts

As always, I'm happy to answer any follow-ups you may have. Good trading to you!

Regards,

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