The Expirations They Are a Changin’

Well, another thrombolic expiration move!

Truth be told, expirations are not as volatile as we think. What does happen though is a move in motion can compound upon itself as options shorts will literally no options premium cushion left get forced to chase to defend positions. This of course adds on to a move in progress and forces the next guy to chase. And so on.

But here’s a thought. What if these Weekly options start to take off? Will this forever change the nature of expiration? Will it effect volatility?

I would say definitely yes, the question is simply how much.

Consider Friday. 25K options traded on the July 107 line that expires this coming Friday. That’s a fraction of the volume (and open interest) of the July’s that went off the books, but it’s about half the volume in the *regular* August options. That’s a ratio  that likely gets higher over time. And don’t forget, you don’t get the dollar premium for 1 week that you do for 4 weeks. Sellers can make a quick profit if nothing happens, but if we start to move, this is just more trapped options shorts to extend the move.

Just a little something to keep in mind.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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