Options on the S&P

[londonkid]

Hi Traders

I hope everyone is having a good start to 2014. I dont trade options and never have however I am interested in how the option markets can influence the underlying futures/cash market.

Yesterday I read on twitter from a reputable source about 'option funds rolling' and how this could influence the S&P.

Can anyone explain what this means or point me to any good material. I am not looking for any handouts here just a guide from the experienced here.

Thanks

Londonkid

 

[optstack]

Trading activity in options can have a direct and measurable effect on stock prices, especially on the last trading day before expiration.

During expiration, many investors attempt to unwind their futures and options positions before the contracts expire. This activity frequently includes repurchasing contracts and closing out positions.

The combined effects of exercise, delivery, hedging, arbitrage, speculative options trading and futures trading activity increases overall trading volume and can influence underlying S&P price volatility.


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<a href="http://www.optionstack.com/"> Options backtesting </a>

 

[FHS]

Trading activity in options can have a direct and measurable effect on stock prices, especially on the last trading day before expiration.

During expiration, many investors attempt to unwind their futures and options positions before the contracts expire. This activity frequently includes repurchasing contracts and closing out positions.

The combined effects of exercise, delivery, hedging, arbitrage, speculative options trading and futures trading activity increases overall trading volume and can influence underlying S&P price volatility.


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Options backtesting

good synopsis.