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THE MARKET WHISPERER 48 3

Friday [2]. It doesn’t take a genius to predict the likely outcome. One only
needs to be familiar with the rules of the market.

Note the Behavior of the SPY ETF during Expiration Week (daily chart)

On the third Friday of every third month, meaning March, June,
September and December, three types of options expire: stocks, futures
and commodities, and indexes. This is also why the day is known as “triple
witching day.” What that means for us as traders is that market activity
will be even more extreme than on a regular options expiration Friday.
Volatility will be higher, and the lack of clear market direction will be more

strongly felt. These are the days when you need to be extremely careful.

Another very interesting phenomenon is that of options expiration
for stocks at round numbers. Options are issued in round numbers: for
example, you can buy put or call options for XYZ priced, let’s say, at fifty
dollars. This means that if you bought a “fifty dollar put”and the stock falls

below that price on the expiration day, you have profited. If you bought a

“fifty dollar call” and the price is above that on expiration date, you have

profited. As with the white numbers in roulette where only the house is a

winner, here too there is only one price, where the options writer is the

only one who can profit from it. What is that price?
Yes, you’re right. Fifty dollars! In other words, towards the expiration

date which is the end of Friday’s trading, the options writer will try to
shift the stock price to the exact round figure. To see which round figure