A massive options expiration on Friday could send billions of dollars into the marketplace and spark a plethora of selling in stocks, say some experts.
On Friday, less than 48 hours after the Federal Reserve raised interest rates for the first time since 2006, 353 million worth of options contracts will expire, a significant increase from the three-year average of about 334 million going into December expiration.
"Much of the open interest in the S&P 500 is close to at the money and represent $444 billion notionally," Mike Khouw said Thursday on CNBC's "Fast Money." The large number could have serious implications on the market, which has treaded water all year, falling nearly 1 percent in 2015 as of Thursday's close.
"The key level to watch for on Friday's open is 2,045, because that's where a big slug of the open interest lies," warned Khouw, referring to the number of S&P contracts that have been sold but not repurchased. That's just points above the S&P 500's current level of around 2,042. A move up from that level could make the expiration a nonevent, said Khouw, but a move below has him worried.