This FTSE expiry is going to hurt.

Nb. Our comment from the 12/12/19


The FTSE has definitely been stuck in our trading range since we last posted, namely 7100 to 7250.

Although the support does tend to kick in a bit more above 7100 than we would like, specifically around 7135, but it is after all a very serious level.

And probably why over the last 7 days 5 of them have tested this low.

If 7100 was to give way then 7000 would be the next stop.

On a more positive note, the zone is again very likely to move to 7150-7250, which also explains why the half way (7125) between the current support at 7100 may well be receiving a bit of unintentional assistance from 7150, the bottom of the new zone.

However, it is the other end of the trading range, 7250, that is of more interest at present.

Essentially, because the last 4 days have seen intraday highs of 7241.50, 7255.73, 7234.40 and 7250.67.

Again, but this time, R1 at 7250, may well be receiving a bit of unintentional assistance from 7250, the top of the new zone, when, or if, it does move.

It is a bit of a grey area, the point at which it becomes likely to move and when it actually does, made worse by this being the biggest of the big expiries, which means it doesn’t do anything quickly.

But, it better sort itself out soon, as next week it’s the rollover and expiry, and Decembers are very rarely dull affairs.


Range:            7100  to  7250          

Activity:          Very poor

Type:              Bearish


Nb. Our comment on 12/19/19


Considering the last December election was in 1923 one can excuse derivatives for getting caught out, especially as they were not even around then.

They were around back in 1987, when we last saw this degree of Tory majority, but it is fair to say that then the derivative market was a very far cry indeed from today’s incarnation.

To be fair it was always going to be tough, as this expiry is the culmination of the entire year, and this election, with everything riding on it, was only called but a month or so ago.

Having tangled with 7450 before, it was interesting to see the market shy away from another go at it on the actual day, the 12th, the intraday high being 7429.04.

It was the Monday, when the full extent of what had happened and its ramifications had sunk in, that did the damage, although 7450 did put up bit of a fight.

However, the sharp eyed would have noticed the intraday high that day was 7552.65.

The market didn’t go there again on Tuesday, but on Wednesday it did everything it possibly could to break through, with numerous tests.

So, no doubt where equities and fundamentals want to take this market, the only problem is the expiry.

Also, no doubt, derivatives have been swept along and aside by the landslide, and so are currently trying desperately to adjust. There is no better example of this than 7450, which was DR, but is now just R2, an enormous fall in just a few days.

The only question now, for us at least, is will they do so in time for Friday?

Sometimes equities do win, for sure, but this is already a massively expensive expiry for the option boys, and likely to get more so, which is going to really hurt.


Range:            7450  to  7550         

Activity:          Moderate

Type:              Bearish     

December 19th, 2019 by