Here is a good illustration of how options can impact price action near expiry.
There is an 82.00 strike rolling off today. For argument’s sake, let’s say you are a speculator long a dollar call, yen put.
When we were comfortably above 83.00, you probably planned to exercise the option and perhaps hold the long dollar position at 82.00 or sell them out slowly into strength.
No, suddenly, you are seeing profits vanish, and you could be in a hurry to sell while the selling is good.
Rumor has it there there is at least $600 mln in expiries at 82.00 this morning, not enough to drag the dollar lower on its own, but enough to get your attention if you profits are eroding a mile a minute.
