Expiration May Help 10K Push
By Dan Colarusso
Senior Writer
03/15/99 02:20 PM ET
Fear not if the Dow doesn't go crashing through 10,000
by the end of today, or the end of tomorrow. Later in the
week, the market's momentum likely will be aided by the
specter of the triple-witch.
March 19 is the first triple expiration of the year, as
March index futures, index options and equity options
die simultaneously. Expirations have become tame
events of late, but this week's may produce some
fireworks.
"The market is up substantially since the last expiration.
The guys who are short are going to have to cover. That's
going to provide a positive bias," says Scott Fullman,
options strategist at Swiss American Securities.
Fullman wasn't as positive on today's market. As
evidence, he pointed to the lack of action following the
merger announcements involving Bank Boston and
Fleet Bank and Pioneer Hi-Bred and DuPont.
Yet, with the amount of call buying that has been
present in this expiration cycle, the traders who sold
those calls will be prodded to action en route to the triple
witch. "The guys who are short calls have to go out and
start buying stock to cover," Fullman says.
Today wasn't much different in the options pits. The
put/call ratio stayed low, hovering around .39 at midday.
More than 240,000 calls had traded against just under
96,000 puts. The Chicago Board Options Exchange's
Volatility Index was staying put at near 26.
Expiration players typically start buying S&P 100 index
(OEX) options as proxies on where the market will move
by the end of the week. While most of the frenetic action
is on Thursday and Friday, today brought some call
buying.
The OEX was up 4.5 to 652.70 halfway through trading.
The call traders went for the March 655 calls and sent
volume to almost 3,000. The price of the contract rose 1
5/8 ($162.50) to 5 1/2 ($550). On the put side, volume on
the March 650 contract was closing in on 4,000 and
trading down 3 1/2 ($350) to 4 3/4 ($475).
Fore Systems (FORE:Nasdaq) calls, busy amidst
takeover chatter last week, were still relatively active
today.
The company's stock was trading up 15/16 to 13 15/16
this afternoon, and its April 15 calls posted volume of
almost 500 contracts. The premium on those options,
however, wasn't very premium. It rose just a teeny bit to
1 9/16 ($156.25 per contract).
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