Dennis, There was a high volume(over 11,000) of 10 and 12 1/2 puts during the day, but only 10 and 75 contracts open, respectively, at the close. Someone was apparently trading with the swings and was sure to get them most of them sold before the end of the day.
I once did that on expiration day with IBM 110 calls. I started with the purpose of liquidating all of them when they still had some value. The stock traded in the 109's and I sold many at 5/8, 7/8 1/2 etc only to then notice them dip to 1/16, 1/8, 7/32 etc so I bought several times as many at the low prices. I bought and sold repeatedly for a net gain.
The only problem is that I didn't count accurately enough and I had 30 contracts left over that I hadn't sold. The stock closed at 110.50 or thereabouts so and Schwab automatically exercised them, leaving me with 3000 shares of IBM in may account the next Monday that I couldn't pay for. Schwab allowed me to sell them myself, and I ended up making a few thousand that day. If it had dropped to 95, I would have lost $15,000!
During my trading the previous Friday I momentarily had around 1000 contracts. If my power and phone had failed, I wouldn't have been able to sell them. Since they would have been automatically exercised and sold the next day with a close over 75 cents in the money, I might have made 50 or 75 cents on 100,000 shares, unless Schwab came up with rule that allowed them to keep it! |
