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Friday, March 29, 2024

Typical Options Expiration Week Hysteria

Courtesy of RobotTrader

Mark it down, today was another big winner for the options market makers.  Any stock that was in an uptrend this month was instantly shanked (retail, oil service, semis).  And any sector which was in a strong bear trend before this week was powerballed (shippers, steels, fertilizers, banks).  All large put and call positions in these sectors will be effectively vaporized by Friday.

Somewhat of a strange day.  As the market sold off, various junker banks were screaming on huge volume:

And the usual furniture junk was flying:

And of course, you had the mid-day panic chain selling in golds and oils upon the slightest hint of weakness in EUR/USD.

More proof that absolutely nothing is taken for chance these days.  The first sign of topping produces an avalanche of selling.  Shoot now, ask questions later.  Big funds are not going to be buying anything these days that cannot be liquidated with a couple of mouse clicks.

But the big story today was Monster Worldwide, another “takeover” speculation:

How many guys were front-running this thing?  Another 3Com??

Wonder how the SEC tackles these cases.

No doubt, they look up the trading records and find some big fish like Raj living in a Park Avenue apartment that takes an entire floor, and pays $1,200/mo. to park his spare AMG SL65 in the building.

But on the other hand, they may find some unemployed bartender, sharing a 2-bed Queens apartment with 3 other guys, daytrading on his notebook, just trying to make enough money to make the next month’s payments on his Mini-Cooper and Equinox membereship.  Or if he’s lucky, he might throw a “Hail Mary” pass with his account and make enough to take the next year off so he can move to Los Angeles and try to get on a reality show.

I mean, really, with so many small time action junkies staring bug-eyed at HeatMaps all day, how do you tell which guys got the inside information first?

I suspect with the 3-mo. T-Bill yield now trading down to a paltry 3 b.p. and 5-yr. Bonds giving a measly 2.19%, there really isn’t anything to stop the “Animal Spirits” from gunning whatever is moving the fastest and setting off short squeezes like this:

But you have to be careful not to ride stuff for too long, otherwise, you could get your head bitten off whole by a Goldman Prop Desk trader who needs a quick score to buy his mistress some diamond earrings.

Because in New York or Los Angeles, there is always some big swinging trader who is behind the 8 ball.  And he has to score big in order to keep the attention of his mistress.  A mistress who is routinely seduced by various and assorted rich men, like:

– Iranian rug merchants, plastic surgeons, opium importers

– High end realtors employed by Sotheby’s

– Famous italian chefs and restaurant owners

– Professional athletes and/or their agents

Why are these guys so desireable for the girls?

Because they can live their lives, entertain, and shower unlimited attention on their women, without having to worry about staring bug-eyed at a monitor 24 hours a day, wondering which direction the EUR/USD is going to move.

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