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Options Expiration Secret Every Investor Should Know



January 16, 2014 – Comments (0)

Would it shock you to know that options are a total scam when you hold them into expiration? Would it surprise you to know that the institutions manipulate stock prices into expiration to maximize their profit? If you are like me and have traded and invested for years, you are not surprised. All others, let me explain the game.

Overall, options can be played throughout the month and done correctly, you can make money. However, I strongly warn against holding them into expiration. Why? Because the institutions will push stocks they have sold large options positions in, to have them expire worthless. In other words, classic stock price manipulation occurs so the institutions can walk away maximizing their profits while the little investor ends up losing everything.

Let me walk you through it step by step. Institutions sell a majority of options. The buyers of these options are the small investor. The small investor pays a premium to buy the option. This premium becomes 100% profit if (and only if) the option expires worthless. Knowing that, it makes sense to think that institutions would want to maximize their profits and have reason to manipulate stock prices to achieve that goal. The institutions have computer programs that will tell them exactly where a stock must close to maximize their profits.

On options expiration Friday, watch for key stocks like Apple, Google, Amazon or JPMorgan Chase to close at round, even numbers. Like $500, $55 or $81. This would be the strike price on the option where the institutions maximize profits. I have seen this happen almost every options expiration Friday. Knowing that this happens gives the average investor the ability to be out of options prior to the manipulation. Education and knowing the shady games of Wall Street give us the ability to profit for life.

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Gareth Soloway

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