2016/05/19 SPY Options Wrap Up

Outlook

SPY broke declining 50SMA and closed at right shoulder of H&S pattern. VTO of $SPX suggests more downside... Those charts suggest short but big option traders are going to the other way. We believe SPY bottomed here and we'll see another reversal tomorrow, then SPY goes higher next week.

SPY today

SPY 5m

SPY had one more leg down, but it looks like the bus was too congested. If you haven't done so, we strongly recommend to read Full Wagon Theory by @verniman.

$NYAD

$NYHL

SPY:RSP

Now $NYHL turned negative, that means 52w low exceeded 52w high. It looks bearish.

$SPX CVI

$SPX STVO

$SPX VTO

CVI and STVO suggests near term/short term oversold and reversal is imminent. 

SPY DWV 05/20

SPY DWV 05/27

SPY Big Trade 05/20

There was another BIG risk reversal trade at 10:09:14. A trader sold 21000 of 05/20 205.00P and bought 21000 of 05/20 205.00C. It was just after first sell off and 205.00P was deeply in the money. I would say this trade was very bold and risky.

There was also BIG put seller at 10:53:41 who sold 14000 of 05/27 203.50P.

I guess those big traders know this level was the bottom.

2016/05/18 SPY Options Wrap Up

Outlook

Fed may hike the rate in June, but we still believe SPY has hit the bottom. While it is very difficult for SPY to clear 210 by Friday expiration, it would be easy to surpass 5SMA level by Friday.

SPY today

SPY 5m

SPY started with gap down and we thought there would be replay of Monday, however, SPY lost all of the gain after FOMC minute, which suggests rate hike in June.

In my understanding, Fed would raise the interest rate because US economy is improving. It's beyond my understanding why people are selling stocks with improving economy.

$NYAD

$NYHL

SPY:RSP

While we are still bullish, it is concerning that Advance/Decline is still at 1:2 level. If this weak level persists, the possibility of hard sell off would get increased. 

$SPX CVI

$SPX STVO

$SPX VTO

CVI had small rebound today, that means very short term oversold condition is repaired now.STVO and VTO suggests one more leg down, but we would like to stay positive as we are waiting for option expiration.

SPY OI 05/20

SPY OI 05/27

SPY DWV 05/20

SPY DWV 05/27

SPY Option Big Trades 05/20

Please notice a bullish reversal trade at 14:08:03. This trader sold 10000x05/20 205 Puts, then bought 10000x205C. This trade was recorded after FOMC minutes, which caused a sell off today. I would say this trade is pretty much bullish and bulls should follow.

One more thing...

At current daily average, May's corporate bond issuance will b almost $260B. Lgst since May '13, if not ever $SPX $SPY

— FZucchi (@FZucchi) May 18, 2016

I'm following @FZucchi on Twitter who often tweet credit/credit derivertive market. According to @FZucchi, corporate bond issuance would exceed $260B this month and it would be the biggest May since 2013. This is an another evidence of Risk-on.

2016/05/17 SPY Options Wrap Up

Outlook

SPY once again broke 50SMA and bears are arguing another H&S pattern. Our view is still bullish and we expect SPY would hit double bottom here and recover 5SMA (206 to 206.5 level) by Friday expiration.

SPY today

SPY 5m

A bear trap might be the best bull trap. While it is possible today's action was bull trap, there was obvious positive divergence in last hours.

$NYAD

$NYHL

SPY:RSP

$NYAD showed some positive divergence against $SPX today.

$SPX CVI

$SPX STVO

$SPX VTO

• CVI and STVO declined hard and hit -1σ.
• VTO had little gain with declining ITBM/ITVM.

→CVI and STVO suggest $SPX is oversold in near term and we expect rebound tomorrow.

SPY DWV 05/20

SPY DWV 05/27

SPY Option Big Trades 05/20

There was a pretty big Put buying at 14:33. Someone bought 20000 of 0520 204P and paid $2M. We know it is almost always fail to buy Put at breakdown in oversold market.

2016/05/16 SPY Options Wrap Up

Outlook

I know it's like broken record, but we expect SPY will exceed or get closed to 210 by Friday expiration.

SPY today

SPY 5m

S&P Futures sold off on Sunday globex session, but it started recovering on Asian trading hour and bears were trapped. Volume wasn't impressive, though.

$NYAD

$NYHL

SPY:RSP

Although the volume was light, Advance/Decline ratio was very good today. SPY just closed at 5SMA, and bears may try to short at this level tomorrow.

$SPX CVI

$SPX STVO

$SPX VTO

• CVI rebounded and entered positive level while it still has a room for upside.
• STVO finished flat while its momentum indicators show some improvement. Short term momentum is expected to increase.
• VTO increased a bit while is momentum indicators are still negative.

→Those indicators don't say "All Green" and bears may try to sell when they see some weakness on the market. I bealieve any dips are buy this week.

SPY OI 05/20

SPY OI 05/27

SPY DWV 05/20

SPY DWV 05/27

SPY Option Big Trades 05/20

SPY Option Big Trades 05/27

On the OI chart, there are spike on 205Put and 205Call and that means either of 205P sellers or 205C sellers have to be losers. While there are still some time before expiration, if SPY shows some strength over 205, those 205 Call sellers have to hedge their position either by buying calls or SPY and it will give some tailwind to SPY longs.