Posted: 14 Dec 2020 12:30 PM PST
December’s quarterly option expiration has a solidly bullish history. In fact, the week of options expiration and the week after have the most bullish record of all quarterly option expirations (page 106, soon to be available Stock Trader’s Almanac 2021). Since 1982, DJIA has advanced 29 times during December’s options expiration week with an average gain of 0.57%. S&P 500 has a similar, although slightly softer record. However, the record is not pristine. In 2018, DJIA and S&P 500 suffered their worst weekly loss as the Fed remained hawkish and determined to raise interest rates even as economic growth was slowing and Treasury bond yields were falling. In 2011, Europe’s debt crisis derailed the market. In 2012, the threat of going over the fiscal cliff triggered a nearly 2% loss the week after.