Options Expiration Friday Is Upon Us

As if the wake from the Fed rate cut wasn’t enough to cause major market gyrations, today is expiration day for September options. The trading activity is always interesting on the last day of options.  The “big boys” can push a stock up or down to make it close at-the-money if needed to balance out their short positions with their long positions.  This is important to recognize because those of us who are still small time can slide in on these trades and find some better entry points.  It doesn’t always work, but occasionally you’ll find a stock that only dips temporarily before returning to it’s non-expiry influenced price trend.  The way I like to play it is to enter some limit orders for put options that are out-of-the-money and hope they hit on a dip.  Worse case no orders hit and I regroup the week after expiration with my typical orders. 

With futures up this morning the “trick” might not work on any plays today, but it’s still a good time for practicing the moves.  Futures have become less foretelling of the future than they used to be.

Luckily I bought my CMCSA puts when I did.  It rose slightly after I bought them back and I missed about $60 in profits, but then it fell and then fell some more.  Yesterday CMCSA closed at 23.72 which would have given me a decent loss, but then again it could make a big come back today.  I’m not completely done with it yet and will be considering more puts if CMCSA finds solid footing again.  I also closed two covered calls on ADBE in my IRA yesterday.  I bought my two calls back at $0.60 on a limit order I placed three days earlier only to see the options trade as low as $0.42 before the day ended.  I still made a profit and held on to my shares which are up nicely this morning in pre-market.  I might not have timed it 100% right, but I think I made the right move in buying them back instead of letting my shares get called away this morning.

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