Option Expiration MADNESS May 18th 2012 - SPY WYNN GOOG AAPL
Option Expiration MADNESS May 18th 2012 - SPY WYNN GOOG AAPL
Today AAPL closed a shade over $530. GOOG a shade over $600. Another option expiration Friday, another peg for AAPL and GOOG. These popular stocks have strong option trading interest as well and this, in my view, leaves the stock at the whim of option writers. I have covered this topic before.
Options in popular stocks each month at options expiration close almost perfectly at a strike price. This is not the case the rest of the month. Anyone who thinks this market is free and unmanipulated needs to look no further than the action that occurs on option expiration.
Even the government uses option expiration to their advantage. I went over this in a video the other night.
September 18th 2008 on option expiration the SEC announced it was banning the short sale on all financial stocks. Everything ripped higher. If you wanted the most bang for your short sell banning buck you would be announcing this move on opex. Touche! I was holding $.20 CAT calls I sold 20 minutes into the session for $10 and $7.50. There were option millionares who bought bank calls at $.05 and were selling at over $5.00. It was a wild day and just what the government wanted.
How about two months later in November? They leaked that Turbo Tax Timmie was to be named the next Treasury Secratary. The DJIA ramped over 400 points in the last 2 hours of the session. Huge money makers in the option market on that move.
So while the financial channels will tell you opex day is usually volatile, I would like to add that it is historically one of the most manipulated trading days you will see each month.
FACEBOOK (FB) Damned If You Do Damned If You Don't!
FB started trading a tad late this morning on some technical issues, when it did finally open the stock hit a high of $45 then fell back to the $38 IPO price. What? Not a 300% gain on its first day of trade? This is Facebook. This is the most highly anticipated IPO in recent memory. The stock will trade record volume for an IPO when all is said and done today. Why not a huge pump on this glorious day? The headlines were already calling FB a failure, the stock was PLUNGING back to its IPO price. Isn't this a good thing? If the stock gapped 200% higher many would be complaining that the market is irrational, it falls back to its IPO price and you say its plunging, falling apart? At what price would the FB IPO close at today to make it a successful day?
Investors Business Daily had a headline "FACEBOOK Faceplant" and called FB's debut lackluster. Lackluster? How is over $16 billion in money volume lackluster? Just because the stock didn't gap 200% higher doesn't mean it was a lackluster day. People are undoubtedly buying the stock, and those lucky enough to be holding shares (not anyone I know is that lucky, smart, and/or connected) are selling them. It is a stock market after all, I don't think an IPO should be judged purely on how high it trades its first day.
Facebook had the impossible task of meeting or beating enormous expectations today. I'm not sure I agree with everyone else in saying it was lackluster or a bust.
You have to consider the current market conditions with stocks in a sharp decline for a few weeks. This IPO came precisely at three month lows and there are headwinds everywhere. I think no matter what FB did today the headlines were already written weeks ago. The anticipation, the hype, gave this IPO something it could not live up to. Trading has been rather dull, the maximum gain thus far has been 11%. Yes.. boring....
Everyone wanted some fireworks today. Huge swings, big gains, big drops... but at the end of the day all everyone got was a solid performance from FB, which will be ultimately overlooked
If your reading this I assume you made it past the opening image. Congratulations, it took me a while too. Sofia Vergara is en fuego and when I thought of something hot I couldn't help but get a picture of her up on the front page. She's hot but nothing these days is hotter than the US Dollar. It's up now 15 days straight....thats what she said.....
What does this have to do with stock options? Dollar strength equals weaker equity prices, and that means you should be more skewed toward buying puts than calls. When we see the dollar weaken it will be time to get back into the calls.
Also keep an eye for both a rising market and a rising dollar. This usually is a sign that the market is going to sell off. We've seen this divergence a few times on this sell off and the currencies almost always win. Asia stocks are tumbling here over night. Stock futures are down big over .5%. Looks like the dollar is going to keep its streak alive for another day. Who's the next hottie to grace the main page?? Stay tuned.
Dollar stays on fire, set for 15th day of rally
By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — The U.S. dollar continued blazing its trail Friday, further extending its longest rally since at least 1985, as raging fears about the euro-zone’s troubles and deep losses for Asian equities lured investors into currencies believed to be safer.
The ICE dollar index DXY +0.21% , a measure of the greenback’s performance against a basket of six major global currencies, rose to 81.619 from 81.454 in North American trade.
The day’s gains come on top of the buck’s 14-day winning run, a period over which it has gained about 3.7%, or nearly three full points, according to FactSet Research data.
Some analysts, however, say the dollar may have further to gain as the prospect of Greece’s exit from the euro-zone preys on investor confidence.
Societe Generale analysts wrote in their weekly forex note that the dollar is benefiting from risk-aversion, as well as “relatively robust economic data outturns” in the U.S.
“As a result, the U.S. dollar will be one of the best performers this coming month,” they said.
Among major currency pairs, the euro EURUSD -0.2472% dropped to $1.2662, from $1.2702 in North America, while the British pound GBPUSD -0.3861% depreciated to $1.5751 from $1.5808.
The dollar USDJPY -0.0385% also recovered some of its sharp losses against the Japanese yen overnight, and was changing hands for ¥79.345 from ¥79.28. The dollar lost heavily against the yen in North America on Thursday, following weak U.S. data and in the wake of strong Japanese economic growth figures released earlier in the Asian day.
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What is the euro for?
Does the euro still have a purpose? With the possibility of Greece leaving the euro-zone, Alen Mattich explains the arguments for and against a single currency.
The dollar also extended gains against several Asian currencies, with one analyst noting signs that the region’s central banks aren’t intervening in currency markets.
“Central banks from the region seem to have toned down intervention as they see currencies across the board losing value,” Royal Bank of Scotland analysts led by Sanjay Mathur, head of research and strategy for Asia-Pacific excluding Japan, wrote in a report.
“They have been seen intervening only in small amounts to slow the decline, and not to reverse it,” the RBS analysts added.
Among regional currency pairs, the dollar climbed to 1,172.70 South Korean won USDKRW +0.6560% from 1,164.85 won the previous day, to 1.2748 Singapore dollars USDSGD +0.3493% from S$1.2715, to 54.75 Indian rupees USDINR +0.9197% from 54.47 rupees and to 3.1325 Malaysian ringgit USDMYR +0.7322% from 3.1115 ringgit.
UPB OPEX Option Trade Ideas for 5-18-12 SPY USO V AAPL