Huge Options Expirations Take The Wheel – US Market Wrap

Wall Street’s massive expiration of options not only left stock traders more cautious on Friday, it also drove one of the leaders of the bull market to a roller-coaster ride.

About $5.5 trillion were estimated to expire during the quarterly “triple witching” in which derivatives contracts tied to equities, index options and futures mature. This time around, NVIDIA played an added role. The value of contracts tied to the chipmaker due Friday was the second-largest of any underlying asset, lagging only the S&P 500. And the expiration coincided with index rebalancing by S&P Dow Jones Indices.

As the contracts disappear, investors adjust their positions, adding a burst of volume capable of swinging individual holdings. The S&P 500 edged lower to around 5,465 amid a surge in trading volume. NVIDIA almost erased a plunge of about 5% before pushing lower again. It lost about $200 billion in two days. Apple Inc. outperformed.

Treasury 10-year yields were little changed at 4.25%. France’s risk premium over Germany closed at the highest since 2012.