It’s a benign, but witchy expiration for a few bulls and even less so for most others. As of 11:45 ET the SP-500 (SPY) is off about 0.23% for a few call holders not exercising their rights. For most other market watchers and takers, the index is up a similar 0.28% as a prior program of asset purchases continues to be digested in an orderly manner.
If you’re a bull watching Friday’s Quadruple Witch expiration, you might see it acting like clockwork as the SP-500 establishes a classic tight, unflinching bid despite the promise of the session’s scary moniker. In the spotlight and behind today’s market support, the U.K.’s Financial Times has reported Spain may be close to announcing its latest bailout next week after much ballyhoo in recent days suggesting otherwise.
In those intertwined markets of notice, some bulls may be noticing their accounts don’t reflect Friday’s minor gains in the SP-500 and in fact, might show a small loss of about 0.23%. If that’s the case, the result is tied to long call positioning in front of today’s ex-dividend of $0.77 per share, versus having exercised the call into shares to receive the payout collectable on October 31.
Elsewhere, the EUR/USD is up 0.10% but backing away from an early confirmation of a five-day pullback. Intraday weakness puts the currency pair back below its 10SMA and Thursday’s hammer pivot high. On the Eurozone ETF side, Spain (EWP) is up 2.5% and leading its regional constituents (EWI, EWG and GREK) whose gains range from about 0.85% to 1.5%.
The US Oil Fund (USO) is flat intraday as it stabilizes for a second session while testing its 50SMA for resistance. The action follows this week’s technical fallout tied to incoming supply rumors involving the strategic petroleum reserve and pledges of plenty to be had for all from oil giant Saudi Arabia.
The iShares Bull ETF (AAPL) is up a leading 0.85% and back above the well-watched $700 level. Friday’s bid has established fresh and delicious all-time-highs despite well-received news this morning of Metro PCS (PCS) landing ZTE’s Anthem 4G smartphone and marking the first ZTE 4G device in the US market.
The 20-Yr (TLT) is off marginally by 0.20% but technically imposing its will on bulls having bought into a suspect, ultra-light volume four-day counter-trend pullback as shares crack below the 200SMA and Thursday’s matching low.
And the VIX ($VIX) is under modest pressure near 14%. Given the broader market’s own fortified ennui which isn’t yet ready to give up the ghost; the confident investor behavior is currently self-perpetuating rather than spooking itself into bearish submission.
On the corporate confessional side, restaurant operator Darden (DRI) is being gobbled up by 4.25% to all-time-highs, though backing off its intraday highs of about 5.75%. The company which owns popular chains such as Red Lobster and Olive Garden announced a penny beat, in-line revenue growth of 4.8% and reaffirmed its mixed guidance for 2013.
KB Homes (KBH) is building even stronger gains of 11% after the outfit posted a surprise profit of $0.04 a share compared to forecasts of a -$0.16 loss. Revenues narrowly beat estimates with year-over-year growth of 15.4%. And looking forward, management expects even stronger operating conditions as it now sees Q4 sales growth of 35% or about $573M in revenues versus the Street’s $561M.
And shares of Oracle (ORCL) are up about 1.0% despite issuing mixed-to-weak results as bulls keep their heads in the clouds, so to speak. By the numbers the world’s largest software database provider delivered in-line earnings of $0.53 per share for Q1, but fell short of sales estimates of $8.42B with an actual figure of $8.21B on revenue growth of just 2.3%.
Looking forward and forward they are it seems; bulls appear to be supportively feeding on Oracle’s upbeat message about its engineered systems sales and enhancements soon to be revealed for its popular Oracle Cloud product.
Finally and in those sometimes accurate heat-seeking option markets, by certain measures ORCL’s stock movement is falling well short or inside of Thursday’s trader forecasts based on its expected move pricing. Using yesterday’s ATM implieds in the September contract, ‘some’ traders were busy calculating a 68% chance ORCL would remain within 4.75% of that day’s closing price.
It turns out they or some of them were more than a bit right—and much to their delight given the large discrepancy. Others of course, i.e. long premium straddle holders and those allowing the trade to be consummated in the first place…well, not so much.
Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.
