Time’s Up, Again, As Stock Options Expire

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Simpler Trading Team

Aug 18th 2022  .  3 min read

Overnight into Thursday, there was plenty of up-and-down action heading into the open session.

Futures initially were trending downward, but ultimately made a positive recovery before the opening bell rang for the cash session.

Both the S&P 500 futures and Nasdaq futures began the day trading relatively flat.

At the open the Nasdaq was trying to hold its own while the S&P 500 was being weighed down. This created a lot of volatility in the early stages of the market open. Both the Nasdaq and S&P 500 fluctuated up and down before ultimately moving to the downside with the bears in control. During this time, the Nasdaq was noticeably weaker and leading the charge.

Once the bears finished making their mark, the bulls quietly took back control of the market and brought price back to the point of control (POC). Once arriving there, they were still not finished, bringing price back to the high of the day before finally being brought back down to point of control.

Coming into the session a key internal level that was discussed among traders in their live-trading online chat rooms was the POCt. This level came into the day at 4,272 for the S&P 500 futures. The reason of importance is because price can often hug this level on weeks like options expiration.

Options expiration, or OpEx, takes place the third week of every month and can have an effect on movement of stocks.

Chandler Horton, Director of Day Trading Strategies at Simpler Trading said, “In an OpEX week you can expect a lot of chop, pops, drops, and a lot of premium crushing.” 

In the late afternoon, it seemed as if the bears had decided to take the rest of the day off. This is where the bulls were able to do the majority of price movement. After dancing around POC for hours, the bulls took back control of the S&P 500. This brought price to and through the previous high of the day set in the early hours of the market. 

During “power hour,” or the last hour of the cash session, the S&P 500 futures led the way to new high after new high on the day while the Nasdaq was only able to reach its high on the day set in the early hours of market open.

This was the case until the last 15 minutes of the session when both the Nasdaq and the S&P 500 pulled back into the close. The indexes were still able to close positive on a last-minute push to end the day.

The S&P 500 futures closed up .25%, gaining 10.5 points, while the Nasdaq futures closed up .28%, adding 37 points.