January calls lose value in expiration-analyst

U.S. stock market report 11:43 ET-16-Jan-2009

Friday marks the monthly expiration of January options which can spur some volatility in U.S. stocks as traders adjust or roll their derivative positions. As of 11 a.m. eastern time, the number of calls expiring in January that are worthless is at 70 percent vs. 68 percent as of the close of business last night, said Scott Fullman, director of derivative investment strategy at WJB Capital Group. On the put side, he noted 32.9 percent of the outstanding Jan 09 puts are worthless compared to 27.4 percent last evening. "Basically the diminishing number of call options that have value shows a divergence with the advance in the major stock benchmarks," he said "Traders are not purchasing these calls into expiration on the probability they will expire worthless and that the rally may not hold."