Friday, July 17, 2009

Options Expiry Think About August

July is almost over, and it looks like alot of stocks are "pinning" to important option price levels. Although today may not be the right day, I am going to be reviewing August options for either "rolling forward" to September or later, i.e. buying more time, or closing out in some way.

As of now, the Stochastics remain very overbought, and for an extended time, and I am anticipating pricing softness into next week, if not a full on downturn.

However, August options will now start to experience increasing "Theta Burn" which is a loss of the time value portion of the option pricing. Vix is low right now (see prior post, seems likes it will want to move up in the not so distant future), low Vix means relative low option pricing, thus leading towards a decision to roll forward. Of course the all important price direction is a key issue, and everyone's crystal ball is a little foggy after this last week.

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Insightful and Useful Comment!