Exploiting Large Options Expires.

[Nowler]

Yes folks... yet another thread from me
I have so many questions!

This thread is seeking to understand how one can exploite Large Options contracts which are about to expire.

Do any of you do this and care to lay out a step by step strategy?

My very basic understanding is that if large vanilla options are about to expire, and price is within 20 to 30 pips of the strike price, then the owners of the contract is going to do what they can to move price to the strike price... ?

Waiting out for large contracts means the owners have the means to move the market to that level, along with everyone else playing the same game.

What's the criteria for the perfect scenario?

I believe it has to be done in the 3ish hours or so before the expiry? And when there is a data release due? But not a high level release?

Can I, as a small fish, play this game on a SB account? Or must I be trading options?

Thanks in advance!

 

[Nowler]

Come on...
Don't keep your gold nuggets of information to yourselves

Share the love... spread the wealth... drop some knowledge bombs by letting me know what strategies you use in this regard. Or even just your understanding of it, even if you don't do this yourself.

All opinions welcome

 

[FXX]

i can't speak for other strategies here. I don't have a strategy specifically for this but do keep large ones in mind since they tend to attract price and it does happen to sometimes affect price such as a shift in a direction post expiry. If for example you are long and the expiry price is between you and your target on a large volume then there is a good change you are wasting your time with the trade.

 

[Nowler]

i can't speak for other strategies here. I don't have a strategy specifically for this but do keep large ones in mind since they tend to attract price and it does happen to sometimes affect price such as a shift in a direction post expiry. If for example you are long and the expiry price is between you and your target on a large volume then there is a good change you are wasting your time with the trade.

Cheers buddy!

So in the example you mentioned, wouldnt one just reduce their target to the strike price of the option?

How I understand what you said is...I am going long and between me (current entry point) and my target (exit), is the strike price of the large options contract.

Because this is a large contract, its a big fish. Therefore, your hesitancy to take that trade is due to them having the power and interest to move price to their strike price and no further? Falling short of your target? Hence making it unlikely that there will be enough volume to take it the rest of the way to your target... correct?

So if That's the case. Couldn't one just reduce their target to that of the strike price of the option rather than just not taking the trade?

Obviously it's all subjective and people have the freedom to go for whatever reward amount they choose to. But would the trade in that example still be a decent trade opportunity up to the level of the option strike price?

Or am I confusing something?

 

[FXX]

Not really. price can produce odd behavior so simply moving the target doesn't improve your chances of success. For me it is a case of avoid until after the event because only then will price react to usual flows without interference with participants fighting for profit on large positions. There are so many opportunities that it just isn't worth the headache.

 

[Nowler]

Not really. price can produce odd behavior so simply moving the target doesn't improve your chances of success. For me it is a case of avoid until after the event because only then will price react to usual flows without interference with participants fighting for profit on large positions. There are so many opportunities that it just isn't worth the headache.

I'll need to mull this over for a while because I'm missing a piece of the puzzle. Maybe paper trading one of these expires will give me some additional understanding of the reality of it.

Cheers buddy.
I'll come back to this after I've had a chance to look at it closer.

All other opinions welcome in the meantime folks!

 

[Nowler]

Anywhere in particular that I can get a free accurate notification when large option contract are about to expire?

I hear some brokers provide this service, but not mine unfortunately.

 

[FXX]

some reading for you:

https://forexlive.com/education/!/how-to-use-the-option-expiry-information-20131008

forexlive also send notifications on size, currency, and timing of the expiration - https://www.forexlive.com/orders

 

[Nowler]

some reading for you:

https://forexlive.com/education/!/how-to-use-the-option-expiry-information-20131008

forexlive also send notifications on size, currency, and timing of the expiration - https://www.forexlive.com/orders

Oh look... so they do!
You'd think I'd open my eyes, eh

Thanks for that buddy!
And the reading material!