Premium Level Open Interest Strategy for Week 7/03/17

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: (34 of 42 pins). The best pin is currently around 242/243, which would mean nothing really happens Monday to Wednesday. Since Monday is a half day and Tuesday is closed I don’t think that would surprise anyone. Should SPY drop then there is good put support at 240. If it rallies than it would prob get stuck around 244 unless it really had momentum or this OI changes after Monday trading (unlikely). 

SPY-F: (28 of 36 pins). The current best pin fro Friday is also 242-243 however, it’s more of a range from 241 to 244. If SPY can get over the 244 calls then it has room to 246. 

AAPL: It definitely looks like a bear flag, but those can sometimes be traps in a bullish market (at least initially). If it drops and stays below 142 then roughly 140 and 136/137 are areas of support. 147 and 149 are resistance levels above.

OI: There isn’t much to go by here since there is a very large range from the 135 puts (and they aren’t even that relevant) to the 147 calls. Because 147 is already technical resistance, if AAPL trades to that level it could be worth getting puts.

AMZN: It’s currently a tiny bit lower than its 50-day and definitely looks vulnerable. There is a gap at 965.73. If it loses that level and stays under it then it’s likely going to 950 with support under there at 938, 927 and 922. To the upside there is resistance at 986, 993 and 998. If it can hold above 998 then it has a chance to get back to highs. Anything under there it is still rangebound to vulnerable.

OI: The best pin is actually 980 with a decent amount of puts there; however, if AMZN opens a good deal below there then those puts may close just leaving the calls as resistance. There is also some put support from 950 to 960 so if AMZN does get below it’s gap and closer to 950 it offers a good risk to reward long (although it may first bounce at the gap fill).  If AMZN gets above 980 and those calls are still there then it may be a decent area to buy puts. 

BABA: Last week it couldn’t get over those high 145 calls. That is also a really tough technical level for price to hold over. Once it can get and hold over that level it will be a good long. It still has a gap that wasn’t filled at 136.50. I don’t know if it will fill it, but I have a trigger there as I think it’s a good spot to get long even if only for a bounce. Other than that it’s really just stuck in a range of 135 to 145.

OI: The open interest has a lot of puts from 137 to 140 and calls at 140 and then starting again at 144. The current best pin is 140 so it’s possible BABA doesn’t do much next week. However, if it does drop enough below 139 or does fill that gap it would be a great place to go long knowing it has all that put support. 

FB: 155/156 has been a wall of resistance and in general it just continues to stay in a range that makes it difficult to play with options. 147 has been decent support and 156 resistance so if the market stays rangebound and FB gets to one of those levels next week then calls or puts for a scalp would probably work. Other than that I think FB would be a good long if/when it got near 143.

OI: At the moment there is lots of calls from 150 to 157 and a decent amount of puts from 150 to 152. Based just on that it would seem FB is again going to be stuck roughly between 150 and 152’ish. Perhaps if it strays too far from those levels there can be a good risk to reward trade for a pin back to that area when premium gets low enough. We’ll keep an eye on how and if the open interest shifts throughout the week. 

GOOGL: Pretty ugly chart and looks like it’s going to test its gap area of 920/923 sometime in the next few weeks. That is an area I am very interested in getting long for a bounce. However, anything under that without a quick recovery and it’s in the gap that doesn’t fill till 893. It doesn’t mean it will drop there in one straight line (unless on news or tech is really dumping), but once solidly into the gap it likely would at some point fill. For now though I would consider the 920 area (give or take a few points) as very strong support.

OI: There is nothing to see in the open interest except the 1,000 calls. 

GS: This really isn’t participating in the same was as the other financials. If it continues to fail because of all the high calls then it tells us it’s just not that strong on its own and only runs cause the other financials do. 221/222 is now the line in the sand on GS. 227/228 is the first level it needs to get through to run, but really until it gets and holds over 231/233 it’s still in no mans land or in jeopardy of lower prices. Once it can hold over 233 it will be a great long trade.

OI: I don’t love seeing this considering we have calls two weeks out. The current best pin is between 220 and 222 with 225 starting the main call resistance. If GS cannot plow through those calls then as I said above, it currently only shows strength on the coattails of the other financials and I may stop myself out of those calls so I don’t lose premium all week. 

NFLX: NFLX also looks like a bear flag and if it drops further then there is a gap that starts at 146.22. Similar to GOOGL that level will likely hold initially (give or take a few) and thus a place to try a long. Once it gets and holds under that level then the gap fill is at 144.5. To the upside 152 and 155 are resistance levels. It would really have to get and hold above 157 to be more bullish again.

OI: This OI is all over the place with the best pin anywhere from 150 to 155, but I don’t think it’s meaningful enough to be played as price could easily stay below the 155 puts. The only real relevant strikes at the moment are the 160/162 calls that would act as resistance if price got there. On a side note, I’m surprised there are so many calls all the way at 160/162 and it could mean someone knows something; so perhaps news comes out or something. 

TSLA: Just like all the other momo’s it has had some downside last week with 354 being the low and what needs to hold on any further pullback. Under there and support comes in at 350, 344 and 330. 330 would seriously be a huge gift and because of that likely doesn’t happen. To the upside there is resistance at 371, 375 and 386’ish. If it gets and holds over that level it likely quickly gets near 400. There is news coming out this weekend so any of these levels could potentially come into play next week.

OI: News definitely always trumps the open interest; however, I would have to say given this open interest I think it would be extremely difficult for TSLA to rally too much higher than 380’ish. There are lots of calls at 377, 390 and 400. If it can get and hold above 377 then it would have room to 390 so I am not going to say a rally is impossible, it would just be difficult. Price closed at 361 so it definitely has room before hitting the first call resistance. If TSLA does get at or over 377 and stalls it could be worth puts for a trade. The current best pin is 367/370 with some put support stating at 355. 

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