Tag Archives: Option

Option Pinning …

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Option strike price sometimes has interesting effect on the market during option expiration week. Looking at MSFT chart, we can see it slides towards 25. Based on the option trading volume data at Yahoo, there were 10,791 contracts (Apr04 25 Call) changing hands with 79,265 still outstanding, the heavest traded strike today. For premium sellers, it’s to their advantages to let the contract expire worthless, which means in this case that MSFT has to go below or at 25 to let Apr04 25 call contracts expire worthless. I have a small long position where I had sold some at 0.95-1.05 earlier and hold some until today I sold them at 0.7.

Down down down …

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Things have turned worse. SUNW broke down from early attempt to break out at 6. The downgrade to junk status from S&P on credit rating didn’t help either. SUNW is seeking support again around 4.5. I’m adding more. I also opened a position in LU.

SOHU failed to test 30 and it’s been moving downward ever since. Next week will be option expiration week, we shall see more volatility. I failed to close some positions on SOHU due to lack of time following it closely. Since there’s no much time value left anyway, I’m holding it until expiration.


SOHU

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Long SOHU Mar 30 C @2.30. This is a play at major support level. If the support around 28 holds up, SOHU will move back into lower 30s.

Tomorrow is the first day BOX opens for trading. I hope the stupid cancellation fees charged by all current option exchanges will be forced to be removed due to increasing competition. There’s another stupid rule in option trading, that is, you can not have 100% electronic transaction. Up to now, all exchanges require at least somewhere during the order entry process, a human involvement must be present.

Waiting to see job reports tomorrow.

ES

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On an option expiration day like today, the market was pretty choppy. Taking quick profits is prudent. The long tails and shooting stars on the candles caused a lot of pain.

I scaled in some 401K money into mid-cap and foreign funds today. I expect the market will be going higher a little while with recent good earnings from INTC, YHOO and GE alike.