Daily Stock Market Equity and Options Trading Commentary

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Friday, July 17, 2009

I Assume the Stock Market is About to Get Real Volatile

Historically on options expiration days especially, as we enter the witching hour (an hour before the stock market closing bell) things get very volatile.

4 Things to watch for on options expiration:
  • Violent Swings either up or down
  • Market velocity; how many times it crosses into positive territory from negative and vice versa
  • The Volatility Index (VIX); anything below 30 is a sign of market stabilization, watch for the VIX to turn positive (currently down 1.42 points to 24)
  • Option premiums explosion; sometimes the time value premiums on options get pushed up, as many traders are trying to close positions and will pay higher premium just so the stock is not assigned
I assume the stock market is about to get real volatile...

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Anonymous said...

does that mean booze and hookers will be in high demand tonight as traders try to burn off the stress?

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