OPTIONS EXPIRATION WEEK

1) Generally after a large move during op x week which is Tues.-Fri. (Mon. Is not factored in) which is usually on a Wed. The market tends to flatten out after. There is a ton of churning going on after this large move because of imbedded manipulation. This is not planned it is just the market place readjusting for ex. If the move was a rally then the longs are taking profits and shorts are covering. There will also be a contraction of volatility the following days.

2) There tends to be a continuation of the trend following that large move. Use pullbacks for buying opportunities and rallies to sell depending on the direction of the move. Everything is not done so you will see a exaggeration of the trend be it shorts who have not covered yet and/or new money coming in if the large move was a rally. The opposite is true if the large move was a sell off.

3) Wed-Fri of op x week historically are weighted towards the buy side up to 70% of the time. There tends to be a lot of buy pressure because during the course of the month what sets up the most is sell programs. So for the large institutions and funds have to close out those positions so buy programs set up the most Wed-Fri. It happens to be one of the most bullish times of the month. Most professional traders want to be flat their cash held indexes because they do not want to have exposure to an opening bullish print Friday morning.

4)You want to try to be out of your front month options by the close of business Wed. If you were expecting a certain move and it has not happened yet it is best to be out of that position unless you have a specific strategy you are employing specifically for those last 2 days of trading the front month options. It is best not to take a chance on delta or gamma deterioration.

5) the Monday following Friday expiration is one of the most liquid trading days of the cycle. It is a day that everybody is at work. You can put positions on wrapped relatively close to theoretical value. It is one of the most intense days to trade because most professionals traders are flattening out and they are not looking for as much as an edge.

6) Stocks that are reporting during op x week do not lie. Stocks that are strong stay strong and stocks that are weak stay weak. It has to do with the smart money. Stocks do not want to disappoint during this week so if they are going to miss they will have pre-announced most of the time. (Which make me think of last month and GOOG everybody was expecting them to miss because of their comscore numbers and we all know what happened.)

7) April expirations historically tend to be bullish. Professional traders are very nervous about going into April expirations short.

8) Be strike price aware during this week. Options will tend to get pinned a price that hurts the most people.

9) TOS believes traders have a small edge during this week to put on new positions for next month Wed-Fri of op x week. Because other then the upcoming Monday the next week's trading is very competitive pricing wise. During op x week hedge funds, liquidity providers, those that take the order flow are more focused on their near term positions and they may be more likely to facilitate trades in the next month at slightly better prices then you will get next week.

10 on op x week there is a reason to watch the relationship between the different broad based indices. Rarely will you have divergence. If you are not watching the futures markets you should be because they push the market.