Premium Level Open Interest Strategy for Week 8/14/17 – Sample

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.

SPX short term technical levels: Longer term the bullish trend is still intact; however, on a shorter term timeframe anything under 2444 is considered bearish.

  • Support under 2444: 2435, 2429, 2420, 2412
  • Resistance over 2444: 2446, 2453, 2359, 2465, 2472, 2476

Open Interest: Remember that this is monthly options expiration so many of these charts won’t change much unless there is extreme volatility. With that said because many of the positions are old and put on over a long period of time, the obvious pin doesn’t usually work that well. Where these charts can help on monthlies is with support and resistance areas that aren’t too far from where price is trading.

SPY-W: (39 of 48 pins). Taken at face value the best pin is currently 245. There are high puts at 245 and 244. SPY closed Friday at 244.12. If price opens below 244 and doesn’t quickly push back over the high puts then it increases the chance it won’t just stall but instead continue lower. The same can be said if price opens above 244 or 245, but then falls below and doesn’t very quickly recover. Should price open at or above 245 and continue higher there is no call resistance till 248. Should price not stay within the 244 to 245 range this open interest can easily shift before Wednesday expiation. 

SPY-F: (31 of 42 pins). Recall that this is a monthly open interest graph where calls and puts were bought or sold over a longer period of time and thus, tend to shift less throughout the week. With that said, extreme volatility does indeed shift even monthlies. Taken at face value the current best pin is around 244/245. Similar to what I said above, if price opens below or in between the high puts (245, 244, 243 and 242) and can’t quickly recover then it will increase the chance of price moving lower and possibly very quickly due to delta hedging. Should price fall below 242 (also a level of technical support) the next large put support is 240. To the upside, if price can get through the high 244 and 245 call strikes the next level of call resistance is 247 and then 249. Opening around 244 or 245 is likely grounds to sit on hands and wait to see how price moves as it’s always possible it remains stuck all week (unlikely, but it’s happened before). 

AAPL: Since most other momo stocks have not been holding there earnings gains, this one might have another flush coming as well. Anything between 154 and 160 is just range bound and difficult to trade. If it drops below 154 and the market is weak then it likely goes down to fill the gap near 150. Under there is support at 148.30. Both areas offer places to buy calls for at least a bounce. If it doesn’t move below 154 I  wouldn’t chase any breakout until it solidly gets and holds over 160.

OI: The current best pin is from 150 to 155 but it’s not that prominent. Really the only thing that sticks out is the 160 calls. Thus, should AAPL trade to that area on a bounce next week I think it’s worth getting puts.

AMZN: AMZN is currently in a downtrend and unless it can get over 1,010 I wouldn’t chase any breakouts before seeing it go lower first. The bottom last week was 951. Under there and there isn’t much support till 928 so it would be a pretty lucrative short if tech is weak and price fell below the level. It would also be a place to get calls for a bounce. To the upside there is resistance at 972, 976 and 982. If the market bounced first before going lower around 980-985 would be a good place to initiate a short position.

OI: Pretty decent put support at 950 and 960. As long as price stays above there it will have difficultly moving lower. However,  should AMZN fall below those 950 puts or gap below them and not quickly recover then it could quickly flush to that 928 level.

BABA: Earnings on Thursday. I will update the open interest on this page Friday morning. 

FB: This was able to hold up decently well last week, but I believe it is in jeopardy. The low Friday was 166.85. The gap fill is just below that at 166.01. I think it can easily get down there and likely 165, 163 and possibly 162 if the market continues to be weak. If it bounces first before moving lower I would not chase it higher unless it could solidly get and hold over 170 and even then I probably still wouldn’t if it happened next week because of the open interest.

OI: The obvious pin is 155 which can happen if the market really flushes (note there is a gap fill at 155.42); however, don’t just assume it will because as I said above, on monthlies the obvious pin doesn’t typically work. What we do know though is it very likely is not going over 170 next week.

GOOGL: Currently it’s barely holding onto where its gap starts, which is at 915. If it falls through there and can’t recover then it likely heads to 900 and then the gap fill at 891. With that said, recall that I’ve mentioned before when there is such a large gap sometimes price gets into it as a tease (say to 911/912) but then rips right back up. The market and tech would really have to be weak for it to just fall straight through the gap. To the upside there is resistance at 939, 951, 959 and 965. If the market bounces first before moving lower 965 would be a good place to get puts.

OI: The current best pin is around 950 but given that this open interest is all over the place I don’t think it’s very useful. However, should GOOGL bounce to the 950 area and then fall back lower with a weak market I think it’s a short. With all those puts on practically every strike I think it can lead to delta hedging and a flush lower.

GS: What a monster rejection after getting over 233. That level, as I’m sure you recall, has been the level I have continually said it needs to get and hold over to rally. It got over that level, but sure didn’t hold very long. Anyway, for now it’s back in a range with 222 as the next support. Under there support comes in at 219, 217, 213 and 209. To the upside there is resistance at 225, 227 and 233. Unless it gets under 219 or over 233 it’s really not in play.

OI: The current best pin is 222 so it ‘s possible it stays in a tight range all week; however, it has less put support to hold it up if it breaks. And a large break would likely change the open interest. I think it will be really hard for GS push through the 225 calls so if there is a rally early in the week and GS gets near that level it offers a good place to buy puts. If price falls under 220 then it likely flushes possibly to 213 or even 207/210.

NFLX: Last week it fell into its gap but hasn’t quite filled it completely. Under 167 and there is support at 165 and then the gap fill at 163, which I think will happen in the next couple of weeks. Under 163 there is support at 160 and then another gap fill at 155. That would be a great place for to get a long position. To the upside there is resistance at 174 and 177. A trade back to 174 next week would be a good opportunity to get puts.

OI: The open interest is all over the place so I don’t currently see it as helpful. The most I can say is there is some put support at 160 and call resistance at 180 but honestly this open interest is currently unhelpful. 

TSLA: This held up pretty well last week, which could have partly been due to all the puts in the open interest. Anywhere from 347 to 370 is just rangebound. I think scalp trades can be possible by getting puts if price gets to 370/372 and calls if price gets to 347; however, there are likely better trades out there. If price should get below 347 and hold underneath it then it could quickly head right back down to 332 and 327 where the gap fill is.

OI: The best pin as of now would be 350, but as with some of the others, it’s a bit all over the place to count on that without looking at other things. For now I would say anywhere from 340 to 360 is the open interest range, which could change if price moves away from that range.