Pins and Punts
S's... N's... I'm not picky!
The opening bell tolls and Super Tuesday springs to life. The opening flurry was dominated by SPY and Spoo sellers but the Minx made a stand at S&P 880 and stabilized the tape. After strong (weak) days, there's typically a fade higher (lower) early in the next session and today was no exception. A few accounts came in and bought about 1000 futes at that level and, well, here we are.
The initial pop has now filled the opening gap and traders are settling in for another day at the office. The financials stand out on the buy side (early) as yesterday's momentum carried over into this morning. The bonds are also notably stronger while oil has started to spill a bit. The dollar, as it stands, is moderately lower.
A couple of quick thoughts on expiration: There's typically a magnet towards strikes with a high level of open interest relative to the average daily volume. Keep that in mind if you're trading individual names that are fluttering around a nice, round number. In the S&P, so you know, there's a fair amount of open interest in the 900 line.
Also, with a few big reports due out after the close, there are potential punts floating around. Those are cheapie front month puts and calls that can be best characterized as a lottery ticket. The QQQ April 26 line is one such vehicle, although I would remind you never to bet more than you can afford to lose on these types of trades. The majority of them expire worthless.
On the flow front, I'm picking up more chatter of an intramarket rotation out of tech into S&P-type names. We first discussed this a month ago, cousin Richard, and it's continued to evolve over the course of time. I would caution, however, that the SOX stochastics are now in the green zone and while they're not good timers, it's something to note if you're looking at this trade.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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