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[redfoliage2]

Usually the boys push down on the week before the expiration week to load cheap calls, then push up big on the expiration week. But this time they pushed up this week. I suspect they are loading cheap puts then push downbig next week. By this time they should have done with their put loading.

Edited by redfoliage2, 12 January 2007 - 02:37 PM.

[arbman]

On that argument, the number of calls increased by 6M vs 7.5M contracts in puts in the open interest since the first trading day in 2007. The bias is definitely bearish according to the OEX index options. There is also quite a bit speculation in the equity options with the low 0.5-0.55 readings. The overall reading is also rather low. A sell off into the expirations is quite possible at this juncture, I think it depends on the Fed and whether the liquidity will be able to support the markets for January. Certainly, the max pain for many option straddles are rather much lower than here, especially for the small caps options... The leadership has shifted toward the materials and energy sector too, it is only making a bounce though, I think there is a little higher early next week, but then it will either sit right up there until the options expire or sell furiously. I do not expect the IT downtrend to start there for some reason though, I think there will be more chopping into the early Feb...