February OPEX

Last week here I showed the SPY open interest which had lots of puts lined up, but with price underneath many of them. I said we would likely see changes to the open interest as the week pborgress and we certainly did. As the week progressed the puts kept growing. Every day that we couldn’t hold above those high puts we were subject to potential delta hedging, which indeed took place several times. If you don’t understand that concept it’s probably something you should learn. Although it doesn’t take place often (and took a long hiatus in 2017) when it does happen it’s extremely powerful. And if you are prepared for it, you can either sit out or benefit from it.

If you have not yet subscribed to my weekly freebie you can do so below to get next weeks free trade idea sent to your mailbox Monday morning. Last week I mentioned it would be difficult to get a grand slam, but outlined a small trade for GOOGL. It did trigger, but literally right at the open on Monday morning. It then went on to hit my targets, but it was impossible to get in so my premium service didn’t take the trade. GOOGL hit that trigger a second time later in the week, but never take the trigger the second time it gets there.  In the end it’s a scratch. So far the weekly freebie record of nine trades is:

  • 4 wins
  • 1 that didn’t trigger
  • 3 scratch trades
  • 1 loss

Open Interest: If you want more information on how to read the high calls and puts in the open interest see here.

SPY-W: (53 of 74 pins since Wednesday expiration inception).* The only two strikes that stick out are 250 and 260. We currently closed above 260 so as long as price can hold above there then there is plenty of room to the upside with no call resistance. If price gets under 260 and can’t quickly get back over it then there isn’t much in the way of puts to hold it up till 250. Should price get to 250, or a bit under it, combined with all the oversold readings, it would be a buy.  

SPY-F: (43 of 76 pins since I began tracking Friday’s).* This is a monthly OPEX which tends to change less during the week; however if SPY moves with such fast and large swings as it did last week then there probably will be some changes. For now, similar to Wednesday, it would be more bullish if price could stay above the 260 puts. Under that level (especially if at the end of the week) there could be delta hedging again to the 255 puts and possibly lower. If price can remain over the 260 puts then it increases the chance that it can push over the 265 puts and bring it toward 266. That likely will be an inflection point due to the culmination of both calls and puts at that level. If price can get and hold over that level I will change the range of this open interest and post the update over twitter. 

Promotional stuff: If you are a short term trader and under performing or finding yourself on the wrong side of the market join us at SassyOptions Premium services and up your game. It’s not to late to make 2018 amazing. 

  •  Full premium service includes all day commentary, open interest and technical analysis on ‘in-play’ momentum stocks, and real time trade alerts through my exact entries and exists (meaning I can’t hide behind vague alerts without telling you what price I paid or sold at).
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Pinning stuff:

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

Wednesday 2/07: Failed pin to the downside only because 272 would have been better. Within the context of the overall market though I think it did pretty good getting a close over all the puts under 268.

Friday 2/09: Failed pin to the downside, although did get back above all those puts under 260 once it flushed out. 

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