Look For Markets to be Pinned Tomorrow (SPY, SPX, QQQQ)

Investors and traders should look for the overall market to be pinned tomorrow, likely at the $1,075 level on the CBOE S&P 500 Index SPX. This is due to monthly options expiration tomorrow. The SPX August $1,075 straddle has a combined open interest of 90,000 contracts, which is more than double any straddle within 20 points. The same can be said of the SPDT Trust SPY August $108.00 and $107.00 puts, which both have over 145,000 contracts open; split the strikes and not coincidentally you have $107.5, or 1,075. The Powershares QQQ Trust QQQQ, which tracks the NASDAQ-100 will likely remained pinned to the $45.50 level given the heavy open interest on the August $45.00 and $44.00 lines, 83,000 and 85,000 contracts respectively. The iShares Russell 2000 Value Index IWN looks like it will remain at the $57.00, which is right where it closed today. This ETF does not see nearly the volume of the above two, but given the all likelihood the indexes will remain pinned, coupled with the highest combined open interest on the $57.00 straddle, these seems like a smart bet as well. The phenomenon of pinning commonly occurs on options expiration Friday due to market makers and large holders alike liquidating their positions and/or hedging their exposure against areas of large open interest.