Last week here I didn’t have much insight based on the open interest and instead just described the market as showing no evidence of being bearish. During the week the open interest changed and I posted updates over twitter that were indeed helpful, especially Wednesday’s. Wednesday morning I showed there was a large 226 put strike and when price dipped below there (during Trump’s conference) knowing the puts were there combined with watching intraday breadth remain positive, offered a great opportunity to get long. Last week I also outlined a paradox that sometimes comes up with the open interest that is relevant for this coming week so if you missed it, you should definitely check it out.
Open Interest: next week is OPEX so the Friday open interest will likely not change much. The Wednesday expiration, although may not change, it is more malleable.
SPY-W: (15:18 pins since Wednesday option inception*). The main take away for this Wednesday’s expiration is that SPY likely will not close over 229. Their is some resistance at 228 and the current best pin is 227-227.50. There isn’t much put support should the market sell off.
SPY-F: (9:13 pins since I began tracking Friday’s). When you look at this chart the best pin is obvious at 220 so please make sure you read last weeks post about obvious pins on monthly charts. I wouldn’t totally disregard the 220 level as a potential target, but unless price closes under 225 (a strong technical support level) then there is no need to consider a possible 220 pin. Should SPY fall below 225 then things should be reassessed using other technical tools. To the upside there is lots of resistance at 230, but other than that it has free reign.
In sum: The path of least resistance is still higher and unless SPY breaches 225 next week, it’s best not to overthink the 220 strike for Friday. Furthermore the fact that SPY closed at the top range of the high calls last week tends to be a sign of strength (see below). For much more analysis (everyday and intraday), including open interest for the momentum stocks and real time trade alerts come join SassyOptions.
* For information on what I consider a pin see here.