TRIPLE-EXPIRATION MAY JOLT STOCK MARKET
The stock market could be jolted one
way or another on Friday as the so-called triple witching
expiration raises the specter of volatile movement.
    The Dow Jones Industrial Average could soar or plunge as
much as 100 points, or both, or even remain static, according
to analysts of the stock and stock index futures markets.
    The simultaneous expiration of March stock index futures
contracts, options on these futures and options on the indexes
themselves, along with options on individual stocks, has
created a mad scramble during several previous "witching
hours."
    Upon expiration of these vehicles, investment managers must
find a place for their funds, and in the past the final hour
has seen a tremendous surge in New York Stock Exchange volume.
    Analysts said the overriding influence of the stock
market's steady climb this year -- and the absence of
worthwhile investment alternatives -- may indicate that the
major players will look to buy into the stock market as the
final hour transpires this friday.
    "I think there will be a substantial swap out of futures
(positions) and into stocks," Jeffrey Miller, of Miller Tabak
Hirsch and Co said. "(But) I've got a streak of four or five in
a row of being right, so I'm bound to be wrong."
    The feeling among some analysts is that the largest money
managers will do the same thing they did at December's
expiration when they plunged their multi-billion dollar funds
into the stock market.
    "Last time, during triple-expiration, there was a
tremendous amount of stock sold, which was offset by huge buy
programs late," said Donaldson, Lufkin and Jenrette Inc analyst
William Marcus.
    Some stock funds quickly place newly arrived investment
dollars into buying futures positions, Miller said. Then, upon
the expiration of the futures, the manager looks to transform
that into a stock portfolio, he said.
    The coming month is also a seasonally strong period for the
stock market, Stotler and Co analyst David Hightower said,
because of the influx of income tax refunds.
    Although Hightower recommended steering clear of trading
during the witching hour, he suggested buying if the market
plunges, believing that the slide would only be temporary.
    Marcus said it was difficult to make a prediction as to
which way the market will go on Friday, partly because many
investors will be engaging in "window-dressing."
    The public disclosure of order imbalances in individual
stocks a half hour before the close may reveal an opportunity
to those investors seeking either to buy or get rid of stocks,
offsetting whatever impact the initial imbalances show.
    Analysts said efforts by exchanges to quell the volatility
on triple-expirations are unlikely to substantially alter the
impact of futures and options on the stock market. Money
managers are sure to find other types of loopholes that emerge
under the new rules, they said.
 Reuter
