By Nicholas Santiago on June 17th, 2010 3:17pm Eastern Time
Today the major indexes have traded all over the place. The SPDR Dow Jones Industrial Average (NYSE:DIA) and the Powershares QQQ Trust (NASDAQ:QQQQ) have been positive at the open then negative shortly later only to trade back to the unchanged level on the session. This king of action is due to the institutional games that get played during the week of options expiration. This is also a quadruple witching expiration that includes the expiration of stock index options, stock index futures, stock options, and single stock futures. Therefore, a lot of games will be played this week into the close on Friday.
Just think of how many put options were bought around the June 6th lows. The institutional money knows this and will move stocks away from the popular strike price to make the near term contact expire worthless or out of the money. After such a big rally on Tuesday many small retail options traders probably had to close out many of their put positions. Traders and investors must always take it easy during this week of expiration which is always the 3rd Friday of the month.
Look at the activity in Goldman Sachs Group Inc (NYSE:GS) today. The stock has been all over the place. It rallies during one hour and completely reverses its gains and trades negative during the next hour. Welcome to options expiration week. Join the Pros and learn to profit from it!
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