The real shark week is back for traders. Often, during the trading week leading up to the monthly options expiration there will be a lot of volatility in the marketplace. On March 15, 2013 there will be a quadruple witching options expiration. This is when options will expire in stock index futures, stock options, stock index options, and single stock futures.
This particular period is notorious for rumors, stocks and commodity upgrades and downgrades, and sometimes very volatile and abnormal stock and commodity activity. You see, every month the major financial institutions try and figure out where the weak money bets have been placed in the options market. These market moving financial institutions will then try and bet against that group of weak hands and take the market in the opposite direction. In other words, if the institutions can figure out where the majority of small retail option traders are betting on the near term contract they will usually cause that options contract to trade out of the money or worthless by Friday. Just a quick tip, don’t trade the near term contract that is about to expire.
Some leading stocks that are usually some of the most volatile during options expiration week include Apple Inc (NASDAQ:AAPL), Green Mountain Coffee Roasters Inc (NASDAQ:GMCR), First Solar, Inc (NASDAQ:FSLR), Netflix Inc (NASDAQ:NFLX), Coinstar Inc (NASDAQ:CSTR) and others. These stocks mentioned are notoriously susceptible to unusual market activity due to rumors, unusual upgrades and downgrades, and erratic volatility throughout the trading week.