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Random Thoughts: The Expiration Trade

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The week fades into memory along with equity options.

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  • I've been trying to find my rhythm all week. As we ready to tie a bow on our May paper, I can't shake this tune from my crowded keppe!

  • With the morning rub out of the way, all eyes turn to equity option expiration as we ready to tie up our five-session set.

  • Two tricks of the expiration trade:


    • Expiration action is typically bookended by the bells.

    • Pin risk occurs when the open interest is out-sized versus average daily volume.

  • 1000 critters left before the six-figure soiree!

  • Why is crude higher? Chatter that will boost demand (in part due to the post-earthquake recovery) and Goldman (GS) boosting its price target for the second half of this year to $141. Note, please, that's only thirteen bananas above where it is now.

  • The best trading money is "made between the twenties" but I used this morning's crude pop to add to some Halliburton (HAL) puts, Continental (CAL) calls.

  • I also doubled down on my Apple (AAPL) puts (note: I removed that excess inventory into the subsequent drop) because 1) I figured it'll be constrained by $190 strike (famous last words), 2) my stop is on the other side of $193 and 3) I'm trading around a core. Get it? Apple. Core. Never mind.

  • I'm always early... which might explain why I'm still single.

  • Sorry-I gotta link some Jerry to get that Freecreditreport.com jingle out of our heads!

  • Here's to you and your canoe!

  • While I'm always looking for "punts" (cheap shots in front of expiration), I'm quite tight with that risk (witness GS yesterday, Hewlett-Packard (HPQ) (sold this morning) and Schlumberger (SLB) (I was IN-N-OUT this morning).

  • There's nothing worse than watching premium decay before your eyes. Well, there is-like people who talk with food in their mouth, long lines and rude 'tudes-but work with me. It's Friday.

  • Here Piggy Piggy Piggy! With the BKX off 2.5%, consider this your friendly Minyanville reminder to toss BKX 75 somewhere on the back burner. If that log rolls over, we'll all be red!

  • Isaac made out like a bandit on The Love Boat. Can you imagine? All those lonely souls hanging out at the bar while their significant other dined at the Captain's table. It wouldn't shock me one bit if Captain Stubbing had a hand in that situation. Animals, I tell ya!

  • Friday Night Face Plant? You betcha! It's a rainy, cold night in Gotham, the NBA playoffs are on and 120" of pure plasma pleasure awaits. Enjoy the weekend, Minyans-you most certainly deserve it!


R.P.

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Positions in HAL, CAL, AAPL
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