Watch the Pin Action

For those not very familiar, this is the time when you have two or three days left to option expiration, you will find that many big cap stocks will seamlessly get pinned to one strike where market makers can do the most damage to calls and puts buyers.  We see this every single option expiration.  


While many people hate this kind of action, but in reality it provides a fantastic opportunity to sophisticated option traders.  For instance, if you believe JPM will get pinned at $40, then why not do 39/40/41 butterfly spread in Feb?  Currently, this butterfly spread is going for $0.35 debit but it will slowly expand to $1 if the stock stays right here at $40.  That's almost 200% return by tomorrow 4pm.  


The key here is to identify that particular strike.  Also, this kind of trade is extremely risky and speculative, so keep position size small and be nimble to cut your losses if its not working out.   


I will be scanning the list of several large cap stocks through out this morning.  But from the first sign, it looks like GS is getting pinned at $155, JPM at $40, ZION at $18, etc.  


Good luck!