Weekly Options Expiration: A New Day For The Richest Keep Getting Richer

If you haven't heard, the CBOE began offering options that expire weekly. This means every Friday will be an options expiration, which means from now on I am expecting increased manipulation on Fridays. Currently there is much larger open interest on the 104-106 June 10 SPY puts than on the 104-106 calls. Also there is large open interest on the 108-109 puts. This means I expect SPY to close trading between 106-108. So here is a detailed guesstimate of how I expect SPY to trade over the next three days.

A assume a small probability (10% chance) that SPY reverses at 107.4 this would indicate that the bears are in firm control. It's not very likely because the bears have been in control for 3 days straight which is effectively a year for the bears. Market is oversold, and ready for a bounce.

The next major resistance level is 108.2. SPY has a better chance of reversing at this resistance level than at 107.4 but Market Makers tend to stretch bounces as far as they can take them. So if they weren't ready to reverse at 107.4 then 108.2 isn't that much higher. So I don't favor SPY reversing at 108.2 either.

When SPY climbs back to 109-109.35 the VIX will be below 30 and people will be convinced that the low is in at 104.4. Furthermore 109.35 has proved to be strong resistance so bears will show up to sell at 109.35 and I believe the market will swing back to the downside at that level.

I know this is all pure speculation with little underlying technical analysis. But you have to have a game plan and in my experience you have to be skeptical and even a little paranoid about options expiration.