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- Friday may be more volatile, against the backdrop of expiring futures on indices
Friday may be more volatile, against the backdrop of expiring futures on indices
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Loading...Friday's market will be fixated on tech stocks and oil prices, but could get a jolt of volatility from an options and futures expiration that occurs once a quarter.
Tech stocks fell sharply Thursday morning, but cut losses throughout the day. Still, the Nasdaq ended down a half percent.
A high-profile casualty of the tech sell-off was Snap, trading down nearly five percent and closing just on its $17 per share IPO price. Traders will be watching to see if it breaks that level Friday. FANG tech stocks remained under pressure Wednesday but also recovered from steeper losses. Amazon.com ended down 1.3 percent and Facebook, off 0.3 percent.
Oil could also be a factor in Friday's trading, especially if it heads toward $40 per barrel, a level considered too low for most U.S. shale drillers to make money. On Thursday, crude futures slid to a fresh 7-month low, with West Texas Intermediate futures settling at $44.46, off 27 cents, and just below the key psychological $45 per barrel level.
"I just think people are discouraged in energy. There's no way of seeing how it trades higher," said Steve Massocca, managing director with Wedbush Securities. "We're getting to where the guys in the Permian Basin aren't going to make money at this price."
He said oil may be at a low now, but the catalyst for a move higher is unclear.
Friday's "triple witching," or concurrent expiration of options and futures on stock indexes, doesn't currently look to be projecting a negative or positive move.
"Quarterly expirations, that'll keep things in order. … I don't see them tilting one way or the other," Cashin said. "The real wild card is Washington and what comes out of there."
The expiration triggers trades in index futures, options and the underlying stocks, and occurs on the third Friday of March, June, September and December.
Massocca said the expiration is a short-term event and could bring on some volatility.
Source: Bloomberg Pro Terminal
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