Value of Perfect Information

A little lesson in market operation, specifically targeting the options markets. If you think like me yesterday you were anticipating a run up into the close on heavier than normal volume, this did not happen market wide but i did notice some activity in the SPDRS.  If you do not know already the June contract on the SPY expired Tuesday, they expire the last trading day of the month. Taking this into account I noticed the largest open interest in the 92 strike both calls and puts, this alerted me to potential pin risk. Anticipating this i snapped up calls on the 92 strike for .10 30 min before the close because of unusual volume more than likely tied to a fund and or large trading trying to round up his position and or speculate on the pin risk. The trader used enough size he influenced the the underlying to reach towards 92, it was not until the closing print did the PPS rise above 92. The print was for around 15mil shares, the price eventually settled at 92.02, not a coincidence. Anyway, the way you capitalize on these types of trades are by buying up the cheap speculative calls and or puts hoping they finish in the money. The trader who bought at .10 sold thousands at .25c in a matter of minutes, always trade with the gorilla! Hedge Accordingly

Tags: SPY

Categories: Charts ,Commentary ,Exclusive ,Markets

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