Friday, August 21, 2009

Today is option expiration, the 3rd Friday of every month IF you were not aware. Magical things can happen on days like today, you can buy up the cheapies with size, only to sell them out for huge gains as the underlying moves towards your speculative strike. For me option expiration is just that, low risk/high reward speculation. Another tricky cog in the wheel to profits is time value, which is zero, only intrinsic value and Vol are factors in price. So when you see so many options trading at seeminly low prices, this is why. My primary focus is going to be in high beta names i know can move, like GOOG, AIG, AAPL etc. If AIG can move like it did yesterday, there is no reason why you would not snap up the 40 strike calls, or vise versa, pick up the 25 puts (IF and only if AIG exhibits price action indicative of a move like we have seen). Im sure there is going to be some pin risk associated with many names, this is where the underlying pins to the strike with the most open interest. July's expiration was fairly eventful, with IBM being in play, along with lots of takeover chatter and other market moving news. Since this is late August, i will be a bit less aggressive unless price action presents itself.

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