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Thursday Look Ahead: Awaiting CPI and Jobless Data (and Quadruple Witching)

The quadruple witching expiration of futures and options should give stocks a lift into Friday, traders say.

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Major headlines for the market Thursday are weekly jobless claims data and CPI, both at 8:30am. Philadelphia Fed and leading indicators are also reported at 10am.

But the talk in the market Wednesday afternoon was about the expirations and what the impact might be on the stock market.

Options traders say they watch the strike prices on expiring options where there's a lot of open interest, and right now that level is 1170 and 1175 on the S&P 500. There is currently huge open interest in calls at those levels.

"If you look at big options positions where the open interest is big, we certainly see stocks move toward those strikes," said one trader.

Stocks closed higher Wednesday, but off the highs of the day. The Dow was up 47 at 10,733, and the S&P 500 was up 6, at 1166. The Nasdaq rose 11 to 2389.

"We had a big sell off intraday. It looked like the end of the world because everybody's long," said another options trader.

Traders say those S&P calls were really cheap after the market started to rally in February. "In expiry, it's very, very complicated to find out whether the open interest is a bank desk that was short and will be forced to cover...or a long-only fund," the options trader said.

Patrick Kernan, who trades S&P 500 options at the CBOE, said he believes the large open interest numbers are the result of a speculative trade by investors, who sold the March 1170s and bought the 1180s, to capture the premium.

"The fact the market has surged higher for the last three weeks has really ruined that strategy," said Kernan, a principle in Cardinal Capital.

"It would be quite likely that the market will gravitate towards that number (1170) tomorrow," said Kernan.

Meanwhile, the VIX (the CBOE's volatility index) closed under 17 for the first time since May 2008.

"Basically, it means people have become somewhat complacent with the fact that this market slowly grinds higher every day," said Kernan.

"The big thing for the VIX—it prices in uncertainty. When it gets low like this, it means people have more confidence in the market. It's not that we're going higher every day, but more confidence that we're not going to have that big down move. I don't know whether I 100-percent agree with that, but that's what it's implying."

"I always tell people not to let expiration week decide what their thoughts are on the market, because in options expirations, odd things do happen," he said. (Learn more: Volatility Trap: Traders Ignoring 'Huge Event' Ahead)

Worth Noting

More than 20 percent of the S&P 500 Wednesday traded above 52 week highs, and many of them were at highs last seen in fourth quarter, 2008. Some of the names include General Electric (parent of CNBC), Disney, Whirlpool, DuPont, MetLife, Anadarko, Boston Properties, Fortune Brand, Union Pacific, Yum Brands and Eaton.

On Thursday, FedEx, Game Stop and Winnebago report earnings ahead of the open. Palm reports after the bell.

In Washington, health care discussions continue on Capital Hill towards a weekend vote. Also in Washington, the American Bankers Association Summit features lawmakers, regulators and bankers. FDIC chairwoman Sheila Bair will be speaking, as will Sen. Richard Shelby (R-Ala.). Kansas City Fed President Thomas Hoenig, Richmond Fed President Jeffrey Lacker and Cleveland Fed President Sandra Pianalto will also be there.

Questions? Comments? Email us at marketinsider@cnbc.com