Stock exchange traded funds were volatile Friday in a so-called quad witching day as options expired on index futures, index options, stock options and stock futures.
“We will be watching the S&P 500 level of 1,200 closely, as there is sizable open interest in SPX index options going into today’s expiration, which could cause some interesting ‘static’ in trading over the course of the day,” said Paul Weisbruch, head of ETF/options sales and trading at Street One Financial.
He also noted despite the rally in stocks Thursday “the recent trend of upside call buying was reversed in favor of put buying.”
“In SPDR S&P 500 ETF (NYSEArca: SPY), October put buyers and call sellers surfaced, and in iShares MSCI EAFE (NYSEArca: EFA) the same activity (put buyers and call sellers) was the theme on heavy volume,” Weisbruch wrote in a note Friday.
Stocks fell slightly into negative territory Friday after opening in the green. [Small-Cap ETFs Provide Market Clues]
In precious metals, gold ETFs were fractionally higher as investors remained focused on leaders’ attempts to stem the European debt crisis. [Gold ETFs Stumble After Central Banks Provide Liquidity]
On Thursday, bearish buyers of near-term calls were present in SPDR Gold Shares (NYSEArca: GLD) as the precious metal has drifted lower this week on lighter volumes, Street One said. “Apparently these options traders are playing for a bounce in the metal.”
SPDR S&P 500 ETF
Full disclosure: Tom Lydon’s clients own GLD and SPY.