Options expiration, yields creating ripples in the market

Yahoo Finance’s Jared Blikre breaks down how markets opened on Thursday.

Video Transcript

BRAD SMITH: Stocks off to the races this morning in the US, as we're about 14 minutes into trade on the day. We are mixed right now. And for much more on today's tape, we've got Jared Blikre standing by at the YFi Interactive. Jared.

JARED BLIKRE: Yes, we are sitting on some gains to the week, although today kind of lackluster so far. As you said, Brad, a mixed market today. The S&P 500 up about 3% for the week. Let's take a look at the Dow. That has been the leader. In fact, it's been outperforming a lot of these other markets by a wide margin on some of the up days. But you can see it is at 3% as well today. And then the NASDAQ, that is looking at gains of about 3 and 1/2%.

Now, taking a look inside the market, tomorrow, we do have options expiration. That's something I want to focus on here. The last Friday-- the last seven out of eight Fridays have been down days. And a lot of those have been major down days. Now we have weekly options expiration. We also have monthly. That's what we're looking at tomorrow. I'm doing a deep dive on this, and I'll have some results from my study in terms of what happens with the market.

But suffice to say that there's a lot going on. In fact, a lot has been-- a lot of ink has been spilled over the last few weeks about how much movement in the markets is caused by options, people buying options and selling options a day or two before expiration. Guess what? That's today. This is a big day. Tomorrow is a big day. Here is the VIX. That's what we're talking about here. That is up just slightly, hovering around the 30 mark.

The VIX of the VIX-- that's the second derivative-- that is coming down. So maybe setting up for a little bit of a risk-on move. Also seeing bond market volatility. That's the ICE BofA MOVE Index. That is coming down as well. But the yield, the yield curve is still screaming higher here, and also flattening. The 13-week T-bill yield only up about one basis points. But you go through the entire yield curve, 5, 10, 30-year bonds, all of those trading at levels that we haven't seen from 2007 to 2011. So, very much a bid, or at least a bid on the yields and an offer on the bonds.