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Random Thoughts: The Expiration Trade


The week fades into memory along with equity options.

  • 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 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!


Positions in HAL, CAL, AAPL

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

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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