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Options Expiration

6/23/2014 5:51:21 AM

Good morning traders,

Big picture, if you've traded long enough you know that options expiration tends to play into market timing considerations. Here are a few things to consider:

On the markets, absent the affect of options expiration, you have options traders getting a bit greedy:

Equity Put/Call ratio Chart

And on one measure, the internals of the market are turning lower and hitting the all important zero level!

NASDAQ McClellan Oscillator Chart

Looking at a couple of our commodity services, here's what's happening in Gold:

Gold Put/Call Ratio Chart

As contrarian traders, meaning when the crowd leans to the left, we tend to lean to the right, this reading above is bearish. Sure there was the point last july when the call buying did lead a significant move higher - but it was also a top. I expect the same here. We'll look to add some gold puts at some point...

And oil?

Oil Volatility Spread Chart

This potential for oil to rally means we'll be further rewarded with our call options. This doesn't always result in an advance, but the potential is there...

Regards,

 

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