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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures
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To: Tom Trader who wrote (10339)12/15/1998 6:06:00 PM
From: SE  Read Replies (1) of 44573
 
Recieved the following from LFG. I know it doesn't apply to your straddle theory and, well, would negate it, but I thought I would post it here for anyone else that might be in a position. Something to consider.

-Scott
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December 15, 1998

Re: This week's S & P option/futures expiration

The last trading day for December S & P futures and options is Thursday,
December 17. Keep in mind, however, that the final settlement price will
not be established until the opening of the underlying cash index as
defined by all 500 stocks on Friday morning. The prospect of a late night
impeachment vote on Thursday sets the stage for a very volatile opening
of the cash market on Friday. This means that in-the-money options could
suddenly be out-of-the-money, and more importantly, short,
out-of-the-money options may suddenly be big losers.

The only way to protect your profits or to prevent unexpected losses is to
liquidate December positions prior to the close of trading on Thursday.
We recommend exiting all short positions, particularly anything within
5,000 points of the market in either direction, as well as in-the-money
longs. The collection of a few ticks of short option value, or exposing
long option value to erosion, is simply not worth the risk.

Please note that our recommendation applies to both Puts and Calls.

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