What SPY Open Interest Says for Week Starting 2/5/18

Last week here I showed there was SPY put support at 181 and mentioned that a good buy the dip point would be around 182 to 183. That was clearly the wrong call as price pushed through those levels and the 181 puts began to disappear as the week went on. By the end of the week we got our first delta hedging to the down side in a really long time. The market has finally begun to work off overbought conditions, which when done (and that can be as early as Monday or in weeks) will lead to a continuation higher as this run is unlikely to be over.

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 GS which triggered and did provide an opportunity to take profits the same day it triggered (Monday), but profits, but the targets for profits were higher. In my premium subscription we did try the trade and ended up losing money on it and thus, this weekly freebie was a loss.  So far the weekly freebie record of eight trades is:

  • 4 wins
  • 1 that didn’t trigger
  • 2 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 73 pins since Wednesday expiration inception).* The only relevant strike to see at this point are the high puts a 270 that should act as support, especially since it would be technical support as well. The open interest will very likely shift after Monday’s trading and will perhaps display a better range of what to expect come Wednesday expiration. 

SPY-F: (43 of 66 pins since I began tracking Friday’s).* This is a bit complicated in that price is already under many of the puts with 274 being the last strike before a slew of new puts start at 270 through 272. If price opens below the 274 puts and can’t quickly recover than those puts may end up closing out and not help keep price over them. If price opens over 274 and especially over 276 then those puts could help keep price from falling any lower. As I stated with Wednesdays expiration, this open interest is very likely to change as trading gets underway next week so lookout for updates via my twitter. 

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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 1/31: since price started way above the 280 calls and when that happens it’s very unlikely to fall below all those, I call this successful (it would have taken a crash to get it under those by Wednesday and I’m going with probabilities not crash scenarios when I judge pinning).

Friday 2/02: First fail to the down side since 8/11/17. With that fail came delta hedging causing the drop to accelerate toward the end of the day.

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