Page 488 - THE MARKET WHISPERER

484 PART 15 - Special Occasions, Special Rules
the stock will aim for on expiration day, check your trading platform’s
“Options” window (if your broker provides this information on your
trading platform), and look at the price at which the options were bought.
If on expiration day the share price is close to the round number at which
the bulk of options were bought, in most cases you can presume that the
stock will end exactly at that round number at which most trades were
made. In other words, most of the options will expire as worthless to their
buyers and with profits to their writers. It’s such a rigged game that it
makes me laugh each time.

Now let’s take a look at the quantity of options on Legg Mason Inc., the
capital management company:
Options on Legg Mason Stock, LM

Notice that at the round figure of thirty-two dollars [1], we find the
largest volume totaling 7,265 options [2] (known as open interest) on
the stock. Where do you think the price will be at the end of trading on
expiration day? As we have discussed earlier, there is only one price at
which the pros, who write the options, are the only ones who profit.