Before I go I just want to clarify the current scenario involving the large option expiries later today on cable and the current price action
Remember that the expiries are “vanilla” call options which means they are still in play up to expiry time (15.00 GMT) regardless of whether they have been breached in the meantime. And that’s essentially how they’re different to a “barrier” option which ends when levels are broken.
There is little doubt in my mind that these expiries have added demand down here in addition to any technicals or M&A flow, and with today’s contracts at 1.6650 now allegedly to be closer to GBP2 bln from initial reports of 1 bln. Many of you remain cynical of how these can impact but as a former interbank trader working closely alongside a large options desk let’s just take it that it’s not conjecture on my part.
Sometimes the impact is minimal and non-existent (and that normally is when the size is less and prevailing price too far away) and other times being given the credit for wicked price moves.Either way the demand down here has made for some great range trading in the last 36 hours as I’ve been highlighting and hopefully you’ve all made a few pips whichever way you have played it.
Don’t rule out further fun n games leading up to expiry time. For more guidance on how to use the info read my post here
See you all tomorrow and, hey, let’s be careful out there!
