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Yet Another Options Expiration “Surprise”

Yet Another Options Expiration "Surprise"

Courtesy of Karl Denninger, The Market Ticker 

Boston terrier puppy in gift box

Since when does the SEC announce that it’s about to make an announcement - about an hour before the market closes the day before options expiration?

There’s clearly biased and then there’s ridiculous.  This falls into the latter camp.

The market, was selling off.  No, not hard, but it was.  Then, suddenly – magically – the SEC decides to announce that it’s going to say something after the market closes.

Everyone of course assumes it’s Goldman, and soon rumors confirm it.  Not that it matters – the entire market turns on a dime.

If the decision was made and the settlement approved, ok fine.  But why today, one hour before the market closes, with OpEx in the morning – with a bunch of SPX Puts and Calls open at the 1100 strike with many of them "in the money" at that point in time.

Now, of course, they’re not by nearly so much.

If I’m supposed to be impressed by the timing, I’m not.  It stinks to high hell, but I’m used to it.  Finding something – anything – you can use to "gun the market" when it’s on the verge of breaking down has become somewhat of an art form.

I find it amusing and have learned to stay out of the way of these shenanigans. 

But if the clown-car brigade in Washington DC thinks this is in any way constructive, or that I should believe that the nearly 100,000 CALL contracts that traded today on Goldman (for expiry tomorrow!) were all "organic", with absolutely no inside information or foreknowledge (with outsize profits for the "inside" folks) then you’re far more naive than I am.  The $150 strike CALLs, in particular, recorded a one-day price "improvement" of seventeen hundred percent.

Nice, if you’re "lucky" enough to buy and hold them at the appointed time.  25,352 contracts on the $150 strike alone representing more than 2.5 million shares were in fact "lucky enough."

I do not yet have reported times on them (and won’t until after the weekend) to know if this "luck" happened before or after the announcement hit the wire.  I’ll look at it when the data is available to me, not that I expect anyone will care to investigate.

These folks in DC need to check their excretory orifice and get rid of the klingons, because this sort of game is just one more example of how confidence continues to be destroyed in our capital markets through acts of willful intent in Washington DC. 


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