Pre market musings for 11-18-2009
You may or may not know this week is OPEX week, the 3rd Friday of every month is the special day where out sized gains can be made and or lost. Understanding the tape heading into Friday could mean a good month or bad month. If you remember last years November expiration the market was completely out of way, not one single person knew what the market was gonna do. That day i saw more incredible trading opps because A. short selling was banned B. stocks were falling and C. everyone was caught off guard. This three factors all played a vital role shaping the tape. My thoughts on this OPEX are either the market turns around slamming through downside strikes creating huge trading opps, or as we all know the market may just have its hand held all the way through Friday.
The Wednesday before the last four OPEX’s have provided many trading opportunities, volume seems to pick up and lots of deals (chatter) will be pushed through. Use this knowledge to your advantage because there could be quite a few stocks which exhibit relative strength/weakness we can capitalize on. If you are trading options today remember the decay will be brutal with everything trading with barely any time premium (theta). Translation, OTM calls/puts will get crushed much quicker than you can expect, flip side OTM call/puts can blow up big if the underlying quickly moves through strikes.