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Friday, March 01, 2013

NASDAQ 100/QQQ Weekly Options Expiration Pin

This was just posted at our member's site, 

Wolf on Wall Street

What did I just say about the Q's in my last post? I'm going to leave that to you.

I went to one of those calculators that figures the Max Pain, where the asset would have to be pinned to put the most number of cash valued contracts at a loss.

Here's what the calculator spit out for the weekly expiring today...

The level of max pain, $67.50!!! The section to the left shows how many calls/puts were out, orange are puts so to make money you'd have to had overcome the premium, transactions costs, etc and be below $67.50 on the put side.

On the Call side, you'd have to do all the same and have the price above $67.50.

Lets look at the QQQ today.
Other than the early gap down, which most options players who hold until expiration are hoping to hit a lotto ticket and that the Q's will head lower, they never did so those put players would be caught with worthless options, the close was $67.41, but most people are hounded by their broker by 2 pm to close out the positions. The range highs for most of the day? $67.47, three cents aren't going to make those options worth anything.

The VERY HIGH of the day was $67.50 and it was only there briefly so $67.50 calls... worthless. 

And that's how an options expiration pin works, the house wins 90% of the time, we did pretty well though.

That's #18 of 983 and a fairly decent return, most hedge funds didn't do that last year, but it's been hit and run, hit and run, taking singles and doubles and not getting too crazy trying to swing for the fences. It just goes to show, there's a right tool for every market.

Brandt Uses Worden's TeleChart and StockFinder 5 Exclusively

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