Expiration Week

Today I'm doing something different by posting a video instead of a written post.  I've had difficulty solving the 'how to I get this video embedded so it can be seen' problem – but 15 hours later, it's ready.


Update: The market was substantially lower today and I did buy in a bunch of Jun call spreads. I hope to buy the remainder tomorrow.

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5 Responses to Expiration Week

  1. Income Trader 06/16/2009 at 8:14 AM #

    Hi Mark,
    Nice Video! gotta love technology!

  2. shortbustrading.blogspot.com 06/16/2009 at 3:46 PM #

    Maybe this is a stupid question. But should you not be specifying what type of call spreads they are?
    Bull call spread or Bear call spread.
    I assume that your call spreads are bull call spreads, as you describe them as being risky.

  3. Mark Wolfinger 06/16/2009 at 4:10 PM #

    It’s the right question and it’s my mistake to have made it unclear.
    I trade iron condors most of the time and I was referring to the RUT Jun 530/540 call spread. I was short that call spread.
    I prefer to always name the spread as simply the 530/540 “call spread.”
    If you buy it, it’s a bull call spread.
    If you sell it,it’s a bear call spread.
    The position was risky because the index was very near 530 and to me the threat was that RUT would move higher. You are correct that it could easily have been perceived as a bull spread, with the risk being that the index would move lower.
    Thanks.

  4. Do you mind discussing the effect of dividends on the ETFs and indices as we come to expiration?

  5. Mark Wolfinger 06/16/2009 at 9:15 PM #

    Hi,
    I’m sorry, I don’t know what to say. I don’t know anything about this.
    If an ETF pays a dividend, you must own the shares on the ex-dividend date to collect. If not assigned prior to expiration, but are assigned at expiration, then you get the dividend if it goes ex-div on expiration Friday, or earlier.
    When the market opens on settlement Friday, the settlement value of an index with European style options would take that ex-dividend into consideration in determining the settlement price.
    Other than that, I have no idea about the dividend situation for these products. Nor do I see what expiration has to do with the dividend.