S&P 500 in the Sell Zone Due to Options Expiry

[Click on the picture above to learn how Murray discovers trading opportunities and how to use Bollinger bands to find great risk/reward trades.]

June S&P 500 futures and options expiry is coming at the end of this week. I have found in the past that there is often a squeeze into expiry with a reversal back to the downside soon after.

The way I see it is that the option dealers like to see as many put options as possible expiring worthless, so they have a vested interest in buying the market in the final days of trading before expiry. Once the option expiry is out of the way, there is often a balancing up period as the hot air is let out of the markets’ tyres.

This expiry seems particularly interesting to me because of the underlying technical set up. We have already seen signs of weakness over the past month which was only stopped by the US Fed saying they were considering dropping rates again. Those words caused a sharp spike in prices back towards the all-time high.

If you have been watching my videos you will know that I am most interested in looking for opportunities after a 75–87.5% retracement of a previous wave. When the market is trending down that is what I call the ‘sell zone’.

So the E-mini S&P 500 futures is now entering the sell zone in the final week of trading for June futures and options. If we were to get a daily or weekly sell pivot after expiry, it will be a very compelling technical set up.

In today’s video I also take you through my method for using Bollinger bands to search for trading opportunities. In an uptrend, for example, it pays to keep an eye on reversals in the area one to two standard deviations below the key moving average. Don’t worry if that doesn’t make sense. Just watch the video and it will all be crystal clear.


Murray Dawes,
Editor, Alpha Wave Trader

PS: The uncensored truth on options: Insider’s FREE Guide to Profitably Trading Options on the ASX. – Download Your Guide Now

Murray Dawes is the Editor of Pivot Trader and contributing Editor at Money Morning. He was one of five, from 5,000 applicants, chosen for a graduate position with the Swiss Banking Corporation — now part of banking giant UBS. The bosses quickly cottoned on to his potential and pushed him up the ranks as a futures broker on the floors of the Sydney Futures Exchange. Murray later broke out on his own and developed custom trading systems to trade leveraged financial instruments like futures. Due to his success, Murray became the ‘hired gun’ trader for Australia’s rich and famous. Today, Murray runs a trading service through Fat Tail Investment Research to help everyday Aussie investors use his advanced trading methods.

Money Morning Australia