A watchful day, albeit one with a resurgent bullion threatening to chew up naysayers and hock them into a spittoon, Jim French-style. Unable to find much to trade myself, much less to inspire, I swapped louche videos with pen-pals on my e-mail joke list. You know who you are. Otherwise, it was a swell day to dodge trouble. I worked at exiting an option spread in Fannie Mae ' a June 50'May 50 put spread that I'd legged into a few weeks ago for a quarter (0.25). The spread itself has performed nicely, quintupling in value as the stock has fallen from the mid-$50s down to around $50. But just try to get out of it. How many at-the-money, expiring puts do you think traded yesterday in Fannie Mae, one of the largest financial institutions in the world? Would you believe fewer than 30? Even the May 50 calls traded under 100 contracts. My friend Larry, editor of The Amernick Letter, noticed it too: 'I am watching weird option activity on the CBOE,' he wrote in an e-mail after the close. 'Usually, volume in Open Interest troughs on the Monday after the expiration date and builds to a peak on the Friday of options expiration. This has occurred during every three-month option cycle since 1995 (the period for which I have comprehensive daily option data). Meaning of Contraction? 'Yesterday's CBOE option data recorded a contraction of 22 million contracts! As I stated earlier, I would expect to see this type of volume contraction next Monday. May options expire this Friday. Therefore, I think I'm witnessing an early race for the sidelines by institutional option players. Certain players are heading to the sidelines to stay out of the way of Friday's expiration. Maybe these people believe that Friday's expiration will be
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