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Equity and index options expire tomorrow at midnight. Many of you may think that today was expiration, but the options contract is a binding legal contract and the brokers need time to make all of the cash transfers and equity purchases and sales before the contracts expire. SPX settled at $2050.07 and RUT settled at $1097.85. I closed our SPX Mar 2050/2060 call spreads yesterday for $1.00; allowing them to enter expiration would have saved us some money; settlement at $2050.07 means one contract would have resulted in a $7 debit whereas we spent $100 to close one spread. But we would have been taking a big risk. Sometimes the difference between the Thursday close and settlement is large. It averaged $9 for SPX last year but ran as high as $23. If you are interested, download my SPX and RUT settlement spreadsheet.

SPX closed at $2050 today, up $9. RUT also continued to run, closing up $10 at $1102. Volatility continued to contract with VIX losing half a point to 14%.

SPX has now put the 200 dma in the rear view mirror. The high at $2078 from December 29th is the next resistance level. I am inclined to think the Fed induced euphoria will end by then. For example, here is a sobering stat: FactSet reports that the estimated profit margin for the first quarter for the S&P 500 is 9.3% - the lowest since 4Q 2012. If we exclude energy companies, it rises to 10% and that is the lowest since Q1 2014. Either way, that doesn't look like the economic strength one expects behind a bull market.

Enjoy your weekend. The tulips are sprouting outside. But we are expecting snow this evening. Let me go check why we are living here...