Tom D, re:Expiry
What's the thread consensus on the market direction going into options expiration tomorrow? I see a drop to 7600 before a real uptrend, but don't know how options expiry affects direction in a down market. EDIT: Specific interest is in the internet stocks.
It's my belief that many MM/arb's were short stock going into expiry week. If so, the question is "when did squaring commence, and how much remains." IMO, squaring commenced last Friday and climaxed yesterday. Having said that, some residual activity may assist the market from falling more rapidly.
You've mentioned the inets, which I consider to be an exception. (Kind of a broad genus, don't you think?) This group has the reputation of being highly speculative with low float. So, the options player [I'll assume that's your game] has the additional worry of share shortages. The group might move in sympathy with the overall market, although individual issues may behave in apparently irrational fashion. A quick scan of the Internet Indices reveals that options activity is historically HIGH; recall in my earlier post that today is the last day to TRADE these indices -- however, settlement can occur thru tomorrow, offering MM/arb's additional latitude in manipulation. To condense this voluminous paragraph: opening a SEP position (at this time) on the internets is like betting red or black, and yes there is a green.
Hope this helps, JMO, BWDIK, actual mileage varies, void where prohibited by law, see your broker for details.
GT,
Alan |
