EarningsBeats.com Digest for June 16, 2021
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It's Options Expiration Time - Be Careful!
We had a great Max Pain session last night, I hope you had the chance to attend. It's always a time to be careful when market makers have an opportunity to steal money from traders - legally! And that's typically what happens as we approach options expiration Friday. One stock that we featured last night was Docusign, Inc. (DOCU), which has been on a tremendous upside run:
Because DOCU has seen such a nice advance, there are now TONS of in-the-money calls that we should all be aware of. This guarantees us nothing, but there is financial incentive for market makers to drive the price of DOCU lower into the end of this week. DOCU closed at 250.48 on Tuesday, but its "max pain", the point at which in-the-money call premium is completely offset by in-the-money put premium, is now at 223.58, more than 10% below its current
price. I don't look for DOCU to drop that far, but there's key price support near 235 and the rising 20-day EMA is now at 224.77. Heading in that direction is what I'd expect, not necessarily reaching those levels. Beyond options expiration, I'm a fan of DOCU and believe we'll see it higher in time - maybe just not this week.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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