Open Interest for the First Expiration of February

Last week here I discussed the high calls a 280 and mentioned that if price got and held above it it was not worth fighting. Indeed price flew above that level at the start of the week and never looked back.

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 outlined a trade for TSLA which worked initially, but profits had to be taken at the first target. In my premium subscription we did try the trade and ended up breakeven after only taking 1/2 of our profits at the first target.  Since the trade wasn’t a slam dunk, but didn’t fail I will call it a scratch. So far the weekly freebie record then is 4 for 7 wins, 1 that didn’t trigger and 2 scratch trades.

Open Interest:

SPY-W: (52 of 72 pins since Wednesday expiration inception).* I’m going to show two different versions of the Wednesday open interest. The first is expanded to view the highest strike which is the 273/274 puts. In this view there is no call resistance and no put support till 274 giving price action free reign in both directions. In the second view I take out the 273/274 puts and you can see there is a better range to work with. Over the 282/283 level there is no call resistance till 288. In this type of situation I would suggest that the 288 to 290 calls may act as small resistance, but in the grand scheme of things (when looking at the first picture), price can easily push through those calls if the market continues to be very strong. Thus, I would suggest that if intraday internals (up/down vol, advance/decline, tick, etc.)  are suggestive of a flattish or bearish day then price is likely to stay below 288; if things continue to act as strong as they were on Friday then price likely will not be stopped by those calls. Finally, should price fall to the 283’ish area it offers a good risk to reward buy area, at least for a bounce. The best current pin is between 282 and 283, but that could change early in the week (I will post updates if it changes via twitter).

SPY-F: (43 of 66 pins since I began tracking Friday’s). This open interest is more bullish with put support that begins at 283 and continues lower with high put support beginning at 281. This open interest would be another reason that if price fell toward 283 it would be a good buying opportunity. To the upside there is very little call resistance and thus, the sky is the limit. 

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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 1/24:

Friday 1/26: Failed pin to the upside.

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