The E-Mini Pit
If you currently trade, or are interested in learning to trade, the CME E-Minis, this thread is for you. As opposed to just another market direction discussion thread, our focus here will be on providing a traders resource of specific information on the E-Minis, including discussions of brokers, trading platforms, order types, trading methodologies, money management techniques, futures-specific tax issues, etc. In addition, please post your trades, but please include your reasoning, so we can all learn. Links to charts, articles, seminars, and other message boards dealing with E-Minis or futures trading are encouraged. Also, please check this original post from time to time to see any new links we post here and to check out The Post of the Day, which will be selected from daily contributions to the board.
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A Few Thread Guidelines:
This is a moderated thread, so please respect these few posting guidelines:
1. Please stay on topic. If you want to discuss corn, beans, or stocks, there are lots of other threads for those.
2. Please no bashing, profanity, or boasting. Show respect for the folks who wish to post here. Help out the new folks who want to learn.
3. If posting trades or market predictions, please tell us why you are taking that position.
4. Have fun, and help us make this board a valuable resource to Futures Traders.
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POST OF THE DAY:
Message #699 from UnBelievable at Feb 18, 2002 12:21 PM
Some Of The Before And After Option Expiry Activity Is Associated With The Unwinding of Positions
While many option buyers will sell their options prior to expiry, there are a number of contracts which are still held when they expire.
Obviously, those that expire out of the money are worthless and do not result in any subsequent activity. However, at the time of their expiration any option in the money can be exercised (it is industry practice for the broker to exercise on behalf of the client all options which expire in the money by .75, but the client may request the exercise of any in the money option). Technically these options are exercised on the Saturday after the options expiration Friday.
This means that anyone holding an in the money call option as of the end of trading Friday will have the actual shares in their account as of Monday morning, and anyone holding an in the money put option will be short the shares as of Monday morning.
In most cases, the option holders will then unwind the equity positions they have acquired, by buying or selling the shares necessary to close the position.
In weeks when the market is down into option expiration most of the options expiring in the money will be puts. To unwind this position the investors goes into the market to purchase the shares and close their short position. For this reason a down week prior to expiration tends to produce an increase in prices the following Monday as there is an increase demand for the shares to cover the short position.
Conversely, if the week before expiration is up, most of the options expiring in the money will be calls, and the investors will have shares in their accounts. On the Monday after expiration, prices are depressed as these shares are sold.
This may be one of the reasons that you are seeing the pattern you do. Unfortunately to the extent that this information can be traded upon, it is, and as a result, it only works except if it doesnt. <gg>
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Key Links for E-Mini Traders:
E-Mini Contract Specifications:
cme.com
E-Mini FAQ: cme.com
Register for Free E-Mini Real-Time Quotes:
realtime.barchart.com
E-Mini Charts (Delayed): futuresource.com
Information on Futures Brokers: elitetrader.com
Futures Trading Free Seminars: zapfutures.com
NFA Home Page: nfa.futures.org
Louis Lambrecht's Pivot Lines Spreadsheet: lvlamb.itgo.com
Tax Site for Investors and Traders: board.fairmark.com
CME 2002 Holiday Calendar: cme.com |
