Option Investor


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The SEC has made drastic changes in the way the market will function since its close yesterday. The SEC has prohibited short selling in financials and may consider short selling in securities in general in the future temporarily.in attempt to provide stability in the market place. In addition, they are considering the creation of a fund similar to the Resolution Trust Fund that was set up to save the Savings and Loan industry in a prior crisis from years ago in an attempt to aid the failing banking industries' bad debts and non performing assets and potentially put them up for auction. The details will be coming forward at a later time. It always seems to me that the "powers that be" tend to wait until things get totally out of hand and then are forced to act in "extremes" to change the course of events that they could have dealt with way before those extreme measure were necessary. But enough said. What will be ..will be...and thus it is for now.

In addition today is also expiration Friday ( great timing by the government and on a triple witching cycle.)

The only issue we have to concern ourselves with is the spread in WFMI. It looked like we would be okay on this one, even after the recent move in the last 4 days in Whole Foods, but as I look at the pre market and the general opening on the up side today. The BID/ASK is 21 - 21.82 on WFMI, so we might have to act on this one at the close in light of all the government action regarding the financials. So if WFMI looks to close over $21 you will need to close out the position at the close.

Remember any issue that is in the money against our short option will be EXERCISED/CALLED AWAY, so be sure to close out any position that is in the money before the close. In this case unless Murphy's law really really hits us, we only have to watch and potentially deal with the one issue WFMI.

Anyway, all of our remaining position are so far out of the money that they should expire worthless. I will wait until this weekend to add plays to our OCTOBER positions so as to get a better handle on what these changes are going to o to this market. Needless to say we will not be dealing with any issues in the financial sector.

We will need to rethink other issues going forward because of these SEC changes, but we will have OCTOBER plays this weekend.

Take care and trade smart.!!!

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