Options Expire This Week

by Geoff Garbacz | 08/18/2021 12:00 Noon
Options Expire This Week

Each month on the third Friday options expire and the next month becomes the front month. Options are useful because they show how investors are hedging and speculating on markets.

August is a mixed month for expiration week.

Below are the last 16 years of August options expiration weeks. There are 7 positive expiration weeks and 9 losing expiration week.

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Average return is -0.48%. So a mixed experience during the August option expiration week. 

Worst draw down was in 2015 -5,77%. Remember 2015 was a losing year for stocks. Best year was 2006 with a return of 2.81%. Four years lost more than -1%.  3 years made more than +1%.

So far this week the S&P 500 is lower by -0.45% into today's trading and now down another -0.18%. The S&P 500 ended a 5 day winning streak yesterday with a loss of -0.71%. It is notable that it did not turn into a loss of more than -1%. Also, this will be the second down day in a row. There have been a couple three day losing streaks and one four day losing streak since the middle February. So the odds of an up day are in order. 

Lesson learned: This is not a market to get too bearish and and short plays are just hit and run events.

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