The hypothesis is that “pin risk” causes a significant increase in trading activity, but more importantly, more imbalances and “abnormal” action (see more below). Both the open and the close have imbalances that can be preyed on. Options expiration day creates imbalancesįor those of us who day trade stocks and focuses on imbalances, the option expiration days (OPEX) are often lucrative. During OPEX week, OPEX Friday, the end of the week, is the most important day because of imbalances, often labeled “pin risk” (see separate section). After all, the OPEX week stock is about stocks AND options. What is OPEX in stocks? There are thousands of listed stocks in the US, and thus the OPEX week is important, despite many just having minuscule options trading. This happens four times yearly: in March, June, September, and December. This happens when the options on stocks, stock index futures, and stock index options expire on the same day. What is triple witching options expiration week? On these rare days, the expiry is on Thursday – the day before Friday. The only exception is when Friday is a public holiday (it could be Good Friday or Independence Day). US-listed stock options expire on the third Friday of every month (to be precise: on the Friday before the 3rd Saturday of each month). However, in this article, we only look at US stocks and equities. There are options on futures, equity, or whatever asset there is. When is OPEX? The options market is fragmented. When do options expire? What is the option expiration week? It’s a trade that holds for a few days, given a condition: The second trading strategy is a swing trade in the ETFs with ticker code XLU (utilities) or XLV (healthcare).
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