PSQL

I'm having problems with the following stored procedure. The problematic
line is the one in red. Any help greatly appreciated.

CREATE or replace FUNCTION converttojulian(datex DATE) RETURNS CHAR(5) AS $$
DECLARE
result CHAR(5);
m1 INTEGER;
d1 INTEGER;
y1 INTEGER;
year CHAR(4);
d2 INTEGER;
days CHAR(3);
days1 CHAR(3);
date2 DATE;
BEGIN
m1 := EXTRACT (MONTH FROM DATE datex);
d1 := EXTRACT (DAY FROM DATE datex);
y1 := EXTRACT (YEAR FROM DATE datex);
date2 := MDY(m1,d1,y1);
d2 := CAST((datex -date2)+1 AS INTEGER);
year := SUBSTR(CAST(y1 AS CHAR(4)),1,4);
days1 := SUBSTR(CAST(d2 AS CHAR(3)),1,3);
IF d2 < 10 THEN
days := '00' || SUBSTR(days1,1,1);
ELSEIF d2 < 100 THEN
days := '0' || SUBSTR(days1,1,2);
ELSE
days := SUBSTR(days1,1,3);
END IF;
result := SUBSTR(year,3,2) || days;
RETURN result;
END;
$$ LANGUAGE plpgsql;

The error reads :

psql:converttojulian.sql:32: ERROR: syntax error at or near "$1"
LINE 1: SELECT EXTRACT (MONTH FROM DATE $1 )
^

QUERY: SELECT EXTRACT (MONTH FROM DATE $1 )
CONTEXT: SQL statement in PL/PgSQL function "converttojulian" near line 12

It doesn't seem to like the use of the input paramater datex. I've tried
using an alias but still get the same problem.

Thanks

Atif