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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Rambi who wrote (11956)	3/15/2001 3:43:18 PM
From: Devin123	Read Replies (1) \| Respond to of 37746

lol

To: Rambi who wrote (11956)	3/15/2001 11:19:22 PM
From: Eurobum1	Respond to of 37746

Rambi...This is for you... thestreet.com Traders Watch Options Market's Three Witches By Brian Louis Staff Reporter 3/15/01 4:56 PM ET If this week's wild swings and 300-point drops in the Dow weren't enough, the market has one more event planned that could make its behavior even nuttier. That event is triple witching -- or triple expiration, if you prefer -- the quarterly simultaneous expiration of futures, index options and equity options contracts. Triple expiration can cause unusual gyrations in the overall market and can exacerbate market moves as market makers and institutional investors adjust positions by either buying or selling securities or futures contracts. That added buying or selling pressure can lead to abnormal swings in the market. This Friday's triple expiration, some options pros say, may not bring big swings despite the expectation of heavy options volume Thursday and Friday as investors close out existing positions or roll into new ones that expire at the end of June. Martin Galivan, a Investec Ernst floor broker at the Chicago Board Options Exchange, said he doesn't think "you'll see much impact at expiration." He said investors have already rolled options positions expiring in March to later months, which will help decrease the impact that expiration will potentially have on the overall market on Friday. Those early rolls are done to make options or futures positions less vulnerable to the type of violent swings in which this market seems to specialize. Rolling a position means that an investor closes an existing March options position and establishes a similar one that expires in a later month, say, April or June. Still, expiration will bring out speculators who trade index options in the hope of a large swing in the broad market. Some traders who opened up put positions to profit from a downturn may be holding their positions through most of Friday's trading. One reason traders rolled or closed out positions earlier than usual was because of the market's violent movements recently. Traders didn't want to get caught in a position that would be vulnerable to losses because of the market's wide swings. Still, there is the potential for some strange things to happen tomorrow either in the major stock market indices or in individual stocks. Larry McMillan, of McMillan Analysis, noted Thursday that put-option open interest (the total number of options contracts that have not been exercised or allowed to expire) in the S&P 100, or OEX, below the 600 strike price is considerable. He said that will lead to sell programs if the OEX is below 600 on Friday, and perhaps even if it is at Thursday's close. The OEX rose 4.61 to 600.71 Thursday. McMillan noted that even if the OEX stays slightly above 600 "you can expect some sell programs as expiration nears." As of Thursday's close, open interest was 7,950 on March 600 puts; 7,552 on the March 580s and 8,327 on the March 560 put contract. Market makers and traders long in-the-money puts have hedged themselves by buying stocks or S&P 500 futures contracts, so if they are going to be exercised they have to sell the stock or futures to raise cash because OEX options are cash-settled. As a result, triple expiration will leave many investors who typically rely on fundamental or technical analysis of stocks watching a market performance they can't often explain.