XJO at 4307

by Raymond Chan 04 September 2011

The market had some excitement on 1 Sep last Thursday as the XJO rises above 4300, touches 4354 and closed the day at 4307.

On that day, Thursday last week, we saw the options market got excited. The number of calls traded were at 25,000 contracts, above the average of about 14,000 daily contracts the week before. That is only half the story as puts traded were higher than average as well. On that day, there were 31,000 contracts of put traded versus the daily average from the week before of about 22,000 contracts.

The next day, on Friday as the XJO failed to maintain its lead above 4300, options market got disappointed and the number of calls traded fell to just 17,000 contracts.

But again, what’s telling is the number of puts traded last Friday, it has remained at the higher than daily average level with 30,000 puts traded.

Options Action Implication

Options market is expecting more weakness on the XJO as it failed to stay above the 4300 level.

Disclaimer

Information/strategies/trading ideas in this blog is provided for general information purposes only and is not intended as an offer to enter into any transaction. Information contained in this blog is not necessarily complete and its accuracy cannot be guaranteed. Information/strategies/trading ideas here have been prepared without consideration of the investment objectives, financial situation or particular needs of any individual investor. Before a client/investor/reader makes an investment decision, a client/investor/reader should, with or without RBS Morgans' or the author’s assistance, consider whether any advice contained in this blog is appropriate in light of their particular investment needs, objectives and financial circumstances. It is unreasonable to rely on any recommendation without first having spoken to your adviser for a personal recommendation. The use of options may not be suitable for all investors. Potential investors are recommended to seek professional advice before embarking on any strategies mentioned in this blog. The information/strategies/trading ideas contained in this blog have been taken from sources believed to be reliable. Neither the author nor RBS Morgans Limited represent that the information is accurate or complete nor should it be relied upon as such. Any opinions expressed reflect the author’s judgment at this date and are subject to change and is not necessarily that of RBS Morgans'. RBS Morgans and/or its affiliated companies may make markets in the securities discussed. Further, RBS Morgans and/or its affiliated companies and/or their employees from time to time may hold shares, options, rights and/or warrants on any issue included in this blog and may, as principal or agent, sell such securities. The Directors of RBS Morgans Limited and Grosvenor Sydney office advise that they and persons associated with them may have an interest in the above securities and that they may earn brokerage, commissions, fees and other benefits and advantages, whether pecuniary or not and whether direct or indirect, in connection with the making of a recommendation or a dealing by a client/investor/reader in these securities, and which may reasonably be expected to be capable of having an influence in the making of any recommendation, and that some or all of our representatives may be remunerated wholly or partly by way of commission. Information in this blog is proprietary to its author and may not be copied as your own or used for any other purpose without the prior written consent of the author. RBS Morgans Limited (ABN 49 010 669 726 AFSL 235410) A Participant of ASX Group Principal Office: Level 29, Riverside Centre, 123 Eagle Street, Brisbane QLD 4000
 

Subscribe to our Daily Newsletter?

Would you like to receive our daily news to your inbox?