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Options Expiration Trading in the Financials

October 19, 2011 By Steven Place

After a strong upside move after more Euro news, the financials ($XLF) rallied hard up to resistance at $13/share.

This is the level to watch going forward, and could be shortable for the next 2 days.

One trade to consider here is to get long $FAZ, but we can go one step further and trade it using options.

Trading options expiration has a lot of dark magic behind it, so make sure your risk is defined.

Specifically, I would look to sell the $FAZ Oct 47 Put for 1.10 or higher.

As long as FAZ stays above 47-- and conversely if $XLF stays under 13, this trade will make money.

I'd would stop out if $XLF cleared 13.

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