Quarterly Expiration This Friday

By: Ray Pellecchia

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Even before we get to the Russell Reconstitution on 27 June, we've got a quarterly expiration to deal with, this Friday, 20 June. Here's our memo to members about the expiration.

For you laymen (like me!) out there, this is about the expiration of stock and index options and futures, which occurs near the end of each quarter. These events have been known to increase trading volume as well as, on occasion, price volatility.

This Friday also is the quarterly share rebalancing of the S&P 500, the S&P MidCap 400, S&P SmallCap 600 and S&P REIT Composite Indices. That rebalancing also has been known to increase the share volume in stocks being added to or deleted from the indexes. Indices. Indexes. I can't make up my mind on that one.

The memo is seven pages long and I was going to run some excerpts, but for much of it, I'm a little out of my limited depth. I mean, the memo contains sentences like this:

In that connection, members and member organizations are reminded that, where a firm has committed to purchase from (sell to) a customer an order at a price that is derived from the closing price (e.g., VWAP and MOC orders) while also reserving a significant position of its hedging or covering transaction to be executed at or near the Close, they must operate with substantial care.

So if those kinds of things figure in your business, please read the memo. With substantiaI care.

I have to apologize to my MWCs (memo-writing colleagues): I picked out the longest sentence I could find, just to make my point. The memo is not as bad as all that. Please forgive me, it's been a long day, it took me two cups of tea and a Coke to get through it, and I can't get into parsing through the memo right now. Though I'm sure it's quite informative and helpful. I mean it. Sincerely.

I'll quit digging that hole now.

Today in NYSE History
17 June 1971 -- Merrill Lynch became the first NYSE member organization to have its stock listed on the exchange.