Premium Level Open Interest Strategy for Week 6/26/17

Please note that open interest often changes during the week when a stock has a big move. This provides a great starting point, but it would be up to you to continue to track it throughout the week if you are trading one of these names. If it’s an earnings name, the chart will be updated the day after the report comes out. The technical levels should remain fairly consistent. If you did want updates and real time trade alerts then consider becoming a full premium member. Finally, news items trumps open interest.

Open Interest:

SPY-W: (33 of 41 pins). This open interest is more bullish and currently suggests a pin of 234 to 244. With that said, there is very little call resistance so that pin can easily change and a rally would have no resistance if new highs were made. There is small support at 243 and then larger support at 240.

SPY-F: (27 of 35 pins). Contrast this to the above and this is more bearish with a current best pin of 243.5 and lots of call resistance beginning at 245. There is some put support starting at 243, but it’s not as strong as the call resistance. Thus, if SPY is able to rally early in the week and this open interest does not shift then there is a decent chance SPY will pullback before Friday’s expiration. If the OI can shift on an early rally then 247 and 250 are the only high call resistance levels left. Under 240 and there isn’t much put support. 

AAPL: Currently it is in a range (that could be considered a bear flag, but that is too be determined) between roughly 142 and 148. As long as it remains in that range it’s not really in play or a great trade with options. If it can get and hold over 148 it likely heads toward 150 and possibly 152. Under 142 and there is support at 140.50 and 137.5. I think a great risk to reward swing long is at 134.50 and I have an alert there for when/if it comes.

OI: 152 (where I think it can get if it gets and holds over 148) is where there is a lot of call resistance and would be hard to get over. It could also be a spot to try a short. 

AMZN: Last week it was a total dud that kept being rejected near 1,005. 987 has been good support so as long as it stays above that level it’s still in a bullish trend with potential to get back to new highs. Between those levels it’s not very playable especially when premium is expensive.

OI: The best pin next week is again 1,000. There is pretty good put support at 990 so if AMZN does fall back to 987 and those puts are still there then it could be worth calls if it was later in the week and premium wasn’t too pricey. There is no reason not to continue to keep an eye on this, but there is no clean cut play on it till we see how it moves next week. 

BABA: Last week it was able to get and hold over its 140 calls, which is why I got long. If it gets back over 145 then it likely goes back to all time highs of 148. Under 142 there is support at 140 and then 138. Under 138 would be bearish.

OI: It’s still new for me to track the open interest of BABA, but assuming it’s similar to other stocks then the 145 level will be tough to get and hold over. However, if it does then we know it has lots of momentum and the next tough spots will be 150 and 155. There is no put support so will have to rely on technicals. 

FB: It started to get momentum toward the end of the week, but had trouble at the 155 high calls. The technical level that would be really bullish for it to hold over is both 155 and then 156.50. Staying over 148 continues to keep in in a short term bullish trend, but that doesn’t mean it’s a fast enough mover to be worth options (not yet anyway).

OI: The call resistance begins around 152, with the highest calls at 155. That happens to be the level it continues to struggle to hold over so if it does get over that level then I think 156.5 is likely in the cards. From there it would either back off again or end up breaking out with potential for 159/162.

GOOGL: This finally began to rally over the 980 resistance level I kept mentioning and if it stays outside of it next week then it has potential to rally back to highs and is on my radar. I think the best scenario would be a quick backtest of 977/980 that bounces right back up, but we may not get that. If price gets back under 977 and holds underneath that level then it is more bearish or at least needs more time before it can get back to highs. Over 987 (which is essentially where it closed Friday and it is likely headed to 998 and then 1,005 and 1,008.

OI: The current best pin is 980, but over that level there is only resistance at 1,000. There really isn’t put support so under the technical support of 977 there wouldn’t be much in the way of puts to hold it up (at least not yet). If it can get over 1,000 there is nothing preventing it from new highs plus more. 

GS: Very weak action last week and I’m not sure if that has to do with the russel rebalance or more is going on. It really needs to get back over 217 or it’s in trouble and very likely going back to 209 and maybe lower. If it can get back and hold over 217 (or gap above it next week, which is possible if it just had to do with rebalancing) then 222 and 227 are the main resistance levels above. Until it gets and holds over 230-233 it will continue to only be a scalping play (or a short). Once over that level it will be a great long.

OI: The current best pin is 220. There is support at 217, which happens to be the level I mentioned GS needs to stay above. There is call resistance from 220 to 225. It’s possible GS doesn’t move much next week given the current open interest. It would have to get over 225 to not face call resistance and to change the OI. 

NFLX: It was smart of us to sell 3/4 of our position right from the start on Monday because it didn’t rally again till Friday. It will need to get and hold over 160 next week to prove itself. If it does it has potential to be a great long and will be on my radar. Between 155 and 160 is no-mans land. Under 155 would be bearish.

OI: The open interest just reinforces that 160 is a big level that price needs to hold over in order for it to sustain a rally. 

TSLA: This looks like it is starting to set up as a long again, although it could also continue to consolidate which is frustrating if buying calls with high premium. Last week 382 was a difficult level for it to hold over, but it did close over that level on Friday. A successful backtest between 380 and 382 that then gets back over that level would be a something I would consider getting long. If it does drop under 380 the other place to look for a possible long entry is near 370/372. Over 387 and it might easily squeeze to 392, 397 and 400, but it becomes more risky chasing it if premium is as insane as it has been recently.

OI: Put support starts at 367. There isn’t much call resistance until 400 so if it rally’s then it definitely has room to run.

Top