Back to a Slow Grind

Last week here I discussed that it would be difficult for SPY to stay over 240 based on the open interest for both Wednesday and Friday expiration. I also said that if SPY took out the lows from the previous week that it may be headed for both it’s gap fills and added that it was a buying opportunity.

Here is how we played it at SassyOptions premium:

Open Interest:

SPY-W: (28 of 36 pins – last week failed to the downside).* The current Wednesday open interest shows a defined range from 238 to 241 which is more bullish as it means it is less likely to revisit last weeks lows next week and has room to go back to last weeks highs. In general, this suggests a rangebound market, but in the upper range SPY has been trading in. 

SPY-F: (22 of 31 pins).* This open interest is also more bullish as there is put support that begins at 238 and goes down to 235 and then again at 232 and 230. Given all the puts from 235 to 238, if price fell below 238 and didn’t quickly recover, it could lead to some delta hedging and a quick move back to 235 on SPY. To the upside there isn’t much resistance at all except a tiny amount of call resistance at 242.

In sum, the current open interest suggest a rangebound week with a more bullish bias. Should SPY fall below 238 with a very weak market then it is likely the case that SPY will head back to last weeks low (if not further); however, minus that situation SPY is likely to remain in its upper bullish range with the potential for a new high after Wednesday’s expiration.

If you are missing out on staying ahead of market moves consider one of these premium services below:

  •  Full premium service, all day commentary, open interest and technical analysis on ‘in-play’ momentum stocks, and real time trade alerts (entries and exists).
  •  Weekly Open Interest and Strategy Post – Open interest and technical analysis for how to trade AAPL, AMZN, BIDU, FB, GS, GOOGL, NFLX, TSLA next week.

*An explanation as to how I define pinning can be found here. More information about what pinning is can be found under the education section of my site.

Wednesday 5/17 : Failed to pin to the downside. 

Friday 5/19: Successful pin. I count this one as successful because it fell within range even though 240 is the best actual pin. I’ve mentioned this before, but to reiterate, on monthly OPEX the obvious pin has a tendency not to work and thus the range is a better tell. 

Tags: , , , , , , , , , ,