Open Interest for Week of September 6 Expiration

Last week I wrote that I thought SPX would stay range bound between 1645 and 1685. I was wrong. Like most people, I don’t like to be wrong, but what’s more important than being wrong is how I deal with it. My approach was not to get upset or to blame the markets, Syria, Obama, or whatever else I could try to use to stay in denial. My approach was to quickly admit I was wrong and be open minded to what may come.

Currently futures are up and it appears like we will open with a large gap. That shouldn’t be surprising to anyone as the market has gapped up all year after weekends that went out in “crisis'” mode. I don’t know if the correction is over, but what I do know is that bearish sentiment has picked up recently, that we are still in a longer term uptrend and that if 1627 does not hold than 1620 is the next support level I am looking to. I am hearing a lot of calls for 1570. Is that possible? Absolutely; however, I still do not think we are going there. I think before that would happen, bearish sentiment would reach extreme levels again and the bulls would take over while the shorts get squeezed. I will however visit that scenario if 1620 gets breached.

Here is what weekly open interest looks like going into this week (expiration 9/6/13) for SPY, AAPL, AMZN, BIDU, CMG, DDD, GOOG, LNKD, NFLX, PCLN and TSLA. Please remember that open interest ranges are NOT a guarantee. They are most useful to see where a stock may struggle or find support. This can be especially useful for selling spreads to collect premium.

SPY – The 160 puts are predominant. There is negligent calls until you get to 164.

AAPL – 500 and 520 are where the highest calls are. It’s possible we see news about the next iPhone event announcement. Also, Ichan could be having his date with Cook as we speak and perhaps we will hear about it. Both could potentially be a sell the news event. Either way, it wouldn’t be surprising or unhealthy for AAPL to take a little bit of a breather since its recent run.

AMZN – Often (but not always) AMZN’s range barely changes throughout the week. If that happens this week than it will likely stay between 275 and 285, but I will update this if changes take place during the week.

BIDU – If the high put open interest is going to hold up the stock than 135 should not be breached. Also, if you look on a weekly chart, bidu has an amazing bull flag setting up. On a daily, it’s still holding its earnings breakout level.

CMG – For the most part CMG stays within a tight range for long periods of time and then makes big moves very quickly. Until it makes that next big move (which is starting to seem like it may be getting close) I have found it to be the most consistent to pin where most call and put buyers get hurt. Right now 295 and 420 are the highest puts and calls.

DDD – Even with DDD’s recent strength, it has not been able to close on Friday’s over its high call OI. Currently that is at 60.

GOOG – I always say that GOOG doesn’t pin well; however, I am asked often to show the graph so here it is. 825 is the highest put open interest.

LNKD – Looked good last week and may be ready to take out its recent high of 247.98. Currently the popular options are the 235 puts and 250 calls.

NFLX – I was surprised to see the puts outweigh the calls based on its relative out-performance. Perhaps many puts were sold or those that bought them have the same mentality of the people that keep shorting it. Highest puts 270 and calls 290.

PCLN – Still holding its earnings breakout well and consolidating in my opinion. I don’t think there is much to glean from this open interest graph, but here you go.

TSLA – Even during the one day of weakness last week when everyone was ready to call TSLA’s top the high put OI of 160 never got breached. Let’s see if the same happens this week with the 165 puts

Good Luck!