Skip to main content

A treacherous options expiration day upends pre-MLK holiday stock action

Written By | Jan 15, 2021
confused US investors, stock analystsoptions expiration

Cars coming out of loop track of Rougarou (roller coaster) at Cedar Point in Sandusky, Ohio. Image by Bobby Proffer, via Wikipedia entry on Cedar Point. Creative Commons 3.0 license.

WASHINGTON – As 2021 climbs out of its New Year chrysalis, two major events are in evidence. We’ve not only experienced a bizarre two-week roller-coaster ride in the political arena, particularly true in our nation’s thoroughly corrupt and compromised capital city. We’re also staring at a potentially more extreme roller-coaster ride in the wonderful world of stocks. Bullish most of this week, Mr Market turned decidedly negative Friday as options expiration day collided with the potential of a disastrous, simulated Inauguration Week even.

Also Read: Democrats’ Wall of Jericho is falling: Trump declasses Obamagate, promises further revelations

ZeroHedge is on top of the money part this Friday morning. The Tylers and guest writers cover options expiration day festivities. Additionally they explore the dilemmas facing governments and stocks as we head for a dubious transfer of political power to the left. In truth, these Socialist autocrats and elites today are Democratic In Name Only. Meaning that, depending on what companies play patty-cake with the Deep State, their stocks may tend to rise and fall depending on how many kiss the Socialists’ derrières. And how obsequiously they do so.

On the other hand, the Deep State itself may feel obligated to kiss the posterior regions of the few Big Banks and Big Tech companies (and at least one dual-state citizen) that can fund the campaigns of its political wing in 2022. It’s not a good situation for the Bill of Rights.

But we digress. Here are a few major bullet points from the Tylers at ZeroHedge along with the links that will take you to the relevant articles. We’ll also have more on options expiration day madness.

1. Goldman Pours Cold Water on Biden’s Fiscal Plan. (Goldman Sachs [NYSE: GS]).

Key ZH observation: “Last night, in our post-mortem of Biden’s hyperambitious $1.9 trillion stimulus plan we warned that ‘the bigger size, and inclusion of Democratic priorities such as a minimum-wage hike, also means that it will be next to impossible for Republicans to vote for Biden’s proposal.’ Additionally, we said that ‘there is a distinct risk that the recent market euphoria will fade soon once traders realize, that Bide[n]’s use of the phrases ‘paying their fair share’ and ‘closing loopholes’ could spark a tax-hike driven selloff since the stimulus boost is already fully priced in.” My take: Bottom line: Whenever a Democrat refers to “paying their fair share,” hide your wallet if you’re in the middle-class. ZH already sees that the chaos of Washington’s ideological politics will continue the current toxicity into the upcoming presidential term.

2. Despite FBI Fearmongering, DHS Sees No “Specific Credible Threats” at this time.
(Authored by Zachary Stieber of the increasingly invaluable Epoch Times).

Dueling government reports: “‘There’s no specific credible threats at this point in time. There’s just this raised level of tension. And so we’re raising our security level. And we’re doing it across the country,’” Ken Cuccinelli, acting deputy secretary of the Department of Homeland Security, said on CNN’s ‘New Day.’” Cuccinelli is an upstanding guy and a former Virginia gubernatorial candidate who was betrayed by that state’s RINOs, leading to the left-wing Democrat takeover of that state. He’ll also be on the way out when Slow Joe and company clean house. He’s telling the truth right now. But another player is telling us the upcoming “truth” that the Deep State plans to add to last week’s phony narrative.

Meanwhile, “FBI Director Christopher Wray told Vice President Mike Pence in a briefing on Thursday that the bureau was seeing an ‘extensive amount of concerning online chatter’ of potential threats before and during the inauguration.”

Deep State operator Wray, who replaced Deep State operator James Comey at the helm of the once-respectable FBI, pitches a counter-meme here. He intends to build on the fake “riot” story pinned on MAGA demonstrators in the nation’s capitol last week.

About that fake Capitol Hill “riot”

The MAGA crowd that broke into the Capitol building was, first of all, actually let into the building by the compliant Capitol Police. Question: Who ordered these standup guys to stand down? Second of all, after President Trump endured a weeklong mass-smear campaign from the cable networks, the “news” media and the Pelosi-crats for launching this “riot,” we learn something very different.

There’s ample evidence that Antifa members, including an “embedded” CNN “reporter” had infiltrated the crowd and whipped them up to get feisty once in the building. This tactic is a favorite of Antifa and has been used in most of the “peaceful protests” that have destroyed billions of dollars of small businesses, along with their owners and employees across the nation. Wray is setting us all up for a continuation of this narrative this weekend and next week. Look for more blame to be heading the Patriots’ way. We suggest the Patriots stay home, lest they walk into another trap like last week’s.

The upshot of all this political machination for stocks next week? If enough MAGA supporters show up at the various alleged capital city demonstrations across the country – including our heavily militarized Nation’s Capital – they’ll be conned into “rioting” by Antifa operatives, which will lead to even more crackdowns on innocent American patriots who have already had enough of the left’s Chinese-style repression. The game right now is called “gaslighting.” And if it’s successful, stocks will crash next week due to all the chaos. Today’s options expiration players are already trying to get ahead of next week’s explosive potential, and we’re seeing that in stocks today.

3. Microsoft, Big-Tech Coalition Developing Rockefeller-Funded COVID Passports.

The Tylers credit Steve Watson for this, via the interesting site, Summit News. This is the next step in the Deep State’s plans to further crush middle-class Americans and their small businesses. Now, they plan to use those new virus “mutations” (viruses always mutate) to begin controlling the movement of the American population with intrusive “passports.” Can Chinese-style “social credit” report cards be far behind?

Watch out for the autonomous cars the Deep State is promoting as well. Don’t imagine that the Feds won’t use the “network of things” to limit where your “autonomous cars” can take you. We need to be careful when the media unquestioningly endorses steps our intrusive government is taking to limit the personal freedoms of those Americans who don’t comply with official groupthink. And note: Mega-rich Microsoft founder Bill Gates is massively behind this particular observation. He’s smarter than us and knows better than us. So do what Bill says. He knows what’s good for us all.

4. Market Turmoil Exacerbated by Record Gamma, Option “Pins.”

Now we get back to the frantic option trading on options expiration day. This article is only for options fans and market tech-heads. The Tylers introduce this piece thus:

“As we showed recently, single stock open-interest has increased to all-time-high levels, which is why today’s expiry is important for stocks, especially for names with large open interest in at-the-money (ATM) 15-Jan options, because as Goldman notes, market makers delta-hedging their unusually large options portfolios are likely to be very active (see the odd report on Exxon from the WSJ which has crashed the stock just as call open interest exploded, leaving countless investors suddenly out of the money). This flow is exacerbating stock price moves in an already jittery market.”

Note that awesomely long sentence above. Guess ZH has enough readers not to worry about standard SEO rules.

A bit more info for the number-crunchers on options expiration day

Investors frequently use options to “hedge” or protect stocks that they want to keep holding, despite threats  from external events. Hence the reference to Exxon’s shares (NYSE: XOM). They’ve been crushed all fall due to falling fuel prices. But over the last 2-3 weeks, they’ve rallied hard in anticipation of a COVID vaccine-led economic recovery, perhaps now beginning in Q2 2021. That recovery could quickly lead to renewed fuel demands as airlines return to the air. Ditto as at least some portion of America’s traditional work-related commuting slowly return to normal levels. Fans of option trading try to stay ahead of these moving targets.

But the change in Washington regimes also places the anti-fossil fuel Democrat-Socialists back in the climate change driver’s seat. That could cause continuing problems for Exxon and its friends in the oil and gas sector. Likewise creating problems in he option trading in these issues as well.

Regime change can also change the trajectory of company shares vulnerable to alterations of President Trump’s pro-business policies. The crazy option trading and underlying stock action Friday is what the Tylers are talking about. The helpfully include a Bloomberg chart. It lists stocks most likely to bear the brunt of substantial policy changes. Worth a read if you’re an engineer by trade, or the kind of stock geek that works only with charts and spreadsheets.

5. US Stocks, Euro Plunge as Pfizer (NYSE: PFE) Says EU Vaccines Will Be Delayed.

They Tylers open the story this way:

“European stocks are getting monkeyhammered after Pfizer notified EU officials that it will be unable to deliver the vaccines it promised in the short term.” Love those colorful metaphors. But this is another big reason behind Friday’s lousy market performance.”

Monkeyhammered? A reference to the Nairobi Trio?

In point of fact, I have thought, for weeks, that stocks have gained a bit much altitude since Thanksgiving. They need to fly a bit lower to regain some equilibrium. Any nasty events this weekend or post-MLK Day holiday could very quickly put investors on a nasty downslope. And just as many of them were preparing to party in anticipation of an unrestrained Democrat spending-fest. Today’s action on options expiration day might be sending us a message to stay alert and stay alive.

Meanwhile, stay tuned to CDN, and have a good weekend, regardless. We all deserve a good weekend. Including those madmen who heavily  indulge in option trading.

Full disclosure:

Our portfolio currently owns small positions in both Exxon and Pfizer. Readers should never construe anything in my articles as an investment recommendation. My analysis often involves the political backdrop that strongly influences movements in stocks in current markets. This column also serves as an informative trading diary. I hope it might be helpful to investors still learning the trade. Like all investors, I win some and I lose some. But unlike others, I let you know about my occasionally epic fails. So take anything investment-wise in this column with a grain of salt. And always do your own research before you buy shares in any company. It’s a caveat emptor world out there. Best of luck!

– Headline image: Cars coming out of loop track of Rougarou (roller coaster) at Cedar Point in Sandusky, Ohio.
Image by Bobby Proffer, via Wikipedia entry on Cedar Point. Creative Commons 3.0 license.


Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17