Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: Copeland who wrote (2093)	4/6/2010 6:43:13 PM
From: Copeland	Respond to of 220965

As a corollary to my statement, this is from another board that I read: Just a few observations concerning today's options activity in the broad-market ETFs. Again, these are strictly qualitative/"gut-feeling", so all usual disclaimers apply, as with options it's tough to infer the exact dynamics other than highlighting price ranges of interest; This is especially true with leveraged ETFs using options themselves to achieve the desired effect. There is heavy put-buying skew in SPY and QQQQ, with IWM calls being the one notable exception (heavy activity at 70, which, being at-the-money, might be perceived as a temporary-top sign when viewed in light of the options activity in the other ETFs. Fact is, put open interest at strikes just below the current prices is thick. There is a large protective cushion right underneath current levels, at least until April 16. The May situation is much more neutral. SPY max-pain is at 117, QQQQ at 48, IWM at 68 as of yesterday. It's almost as if a lot of market participants have hedged/collaredtheir broad market ETF positions for automatic exit by April expiration - either stock called away via calls written that are now ITM, or puts bought that will go ITM after a slight drop - say 2 or 3%. This is a "passive" way of going to cash one way or another by the beginning of the new earnings season and re-assessing the situation. It's a convenient way to exit in size without altering market dynamics too much when the decision is taken; The result is not too visible on the tape... ...if true, it would also explain the "flatlined" market activity during the day that we have been observing lately.