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Daily Market Update – November 25, 2014 (Close) This was expected to be a quiet week, at least in terms of economic news. The only real bit of important information was going to be this morning’s 3rd quarter GDP report, as well as any revisions to the previous quarter. For the previous two quarters those revisions were fairly significant and took the markets by surprise, although in different directions. There are both good surprises and bad surprises. The first of those revisions was a little stunning and probably reflected the really horrible weather of last winter. This time around, just like the last time, the revisions are of the good kind, but not so much that people are starting to whisper about inflation. At some point, that will become a topic of discussion and concern, but for now, any economic growth, even if via revisions, is welcome. This time, however, the good GDP news doesn’t appear to be translating into any market euphoria, so another potential catalyst to take markets higher may have gone by the wayside, although you never do know how the market will react once the bell rings for real. The opening futures rarely foretell what’s going to happen in the actual trading session unless the futures are very strongly higher or lower. This morning the futures were virtually unchanged as a result of the GDP report and were pointing mildly higher to begin the session. The day’s trading eventually was a good reflection of the futures and ended the day perfectly flat. Didn’t even set a new record today. What are the chances of that? After a few opening trades yesterday there may still be some opportunity to do something in this shortened week, but now with only 1 1/2 days of premium remaining there’s not likely too much incentive to do anything with an expiration this Friday. Even the sale of calls on uncovered positions, if those opportunities arise, are more likely to now start looking at subsequent week expirations. As the week approaches the erosion of time value there may be some opportunity to also look for rollovers a little earlier than usual and that’s exactly what happened today on a couple of positions. Typically the rollover process begins on Thursday, although the ideal is most often on Fridays and the closer to the end of trading, the better. However, sometimes when erosion begins sooner or when there is already not much premium remaining, there may be reason to act sooner, especially if there is a prospect, otherwise, of not being able to make the trades. Lately, the rollovers have been more difficult to execute as the volume and price expectations have been aberrant. A little volatility would go a long way toward getting both the volume and the bid-ask spreads to become more reasonable. Today I expected relatively little market action and got exactly that, but was very happy to get some rollovers done. I think, though, that I would have been happier to get some uncovered positions finally find cover and contribute something to the bottom line to help pay for this week’s Thanksgiving Dinner.
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