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Beware of Whipsaw Wednesday

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February 15, 2012 – Comments (0) | RELATED TICKERS: GMCR , FSLR , NFLX

The Wednesday before options expiration is usually the most volatile trading session of the week. We call this trading day 'Whipsaw Wednesday' as the action will usually be very erratic. This is a time when the large institutional traders will try and shake out the small retail options traders that is playing the near term expiration. As it goes in life, the big fish will most often eat the little fish, it is no different in the stock market during the week of options expiration.

Traders must always be cautious when trading many of the popular stocks. Stocks such as Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Netflix Inc (NASDAQ:NFLX), and Wynn Resorts Ltd (NASDAQ:WYNN), First Solar Inc (NASDAQ:FSLR), and Green Mountain Coffee Roasters Inc (NASDAQ:GMCR) are just a few stocks that will be candidates for extreme volatility this week. The major stock indexes could also be very volatile today. Traders should not be surprised if they hear endless rumors about stocks, or possible geopolitical events around the world into the closing bell. The big institutions have an agenda to make sure the small retail options trader winds up with worthless options by Friday.

Nicholas Santiago
InTheMoneyStocks.com

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