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Floyd's Aftermath: Three Quiet Witches

There's not much early expiration speculation.

Hurricane Floyd messed with the witches.

Friday marks the quarterly expiration of stock and index options and index futures, the so-called triple-witch expiration, but what normally would be a roiling-opening rotation proved to be fairly quiet after Thursday's unwarranted weather panic in New York City. Traders bit the bullet Thursday and rolled their September positions out to October a day early.

"Rather than risk having

Mayor Rudy Giuliani declare a state of emergency, most of the traders we talk to weren't willing to ride out the storm and leave it to some bureaucrat to shut down the city," said Jon Najarian, founder of

Mercury Trading

options firm in Chicago. "So they got out early."

Still, triple-witching generally produces volatility throughout the trading day, and though stocks were rallying in the morning, "I expect most traders will 'fade' the rally," meaning they will sell into the strength, Najarian said, "because that's all this market has done for the past week: Open up strong and then sell off big."

It's early in the game, but as of 11 a.m. EDT, the

Standard & Poor's

100, or OEX, index was up 5.4 to 700.2. The early lines looked like traders weren't in a hurry to commit in either direction as the out-of-the-money options on each side evaporated in value.

The out-of-the-money September 710 calls were trading at a teenie, 1/16 ($6.25), losing 3/16 ($18.75); out-of-the-money September 690 puts were trading for 1/4 ($25), down 15/16 ($93.75).

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The one twist in this Friday's expiration is that December is proving an unpopular destination for new positions. Najarian said his firm has been taking orders from customers for Standard & Poor's index futures options dated in March -- but not December -- the next expiration for once-quarterly index options.

"People are afraid of Y2K. They're skipping December and pushing out their orders to March," the following quarter.

Traders typically get uncomfortable this time of year, and Y2K worries are only adding to that. October is historically a painful month for the stock market, and "ever since 1929, traders don't like October in odd-numbered years," Najarian says.

Still, the S&P 500 index at-the-money puts and calls showed a bias toward the upside for October. With the index at 1325.3, up 6.9, early Friday, the October 1325 calls were up 3 1/2 ($350) to 34 1/4 ($3,425), while the October 1325 puts were down 5 7/8 ($587.50) to 28 1/8 ($2,812.50).

A slug of November 80 puts in


(AIG) - Get American International Group Inc. Report

crossed in the morning also, at a price of 1 1/2 ($150), up 1/8 ($12.50). The stock was up 1 9/16 to 92.

Earlier in the week, chatter in the options market focused on whether AIG might buy


, the money management firm. If the company is being viewed as an acquirer, some traders could be playing on weakness in the underlying stock as a result.