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SPY Option Market Analysis 20170111

Wrap up for today

Yesterday I wrote

Most of those 226P was bought today at 0.2 level, ant VWAP is around 0.4.  Those 226P holders may hold the position even after the price exceeds VWAP, because puts are too cheap now. Do you set stop-sell for lottery ticket? I don't.

SPY 0111 226P 5min

Indeed, SPY was sold as Trump talked at conference, and the VWAP 0.40 worked as resistance, and I thought the third attempt would break the VWAP. I was wrong.

SPY 0111 226P 5min after Trump

The breakout was fake and I lost my bet. I should have stayed at my discipline. Don't be too greedy.

Tomorrow and beyond

SPY 0113 OI

The price based OI (3rd row) for Friday looks slightly bullish. 228.5C would become as resistant level.

SPY Option Market Analysis 20170110

Wrap up

OptionM8 app is not a price prediction tool, but user can predict a price reaction from the option market itself. We had a typical example in SPY options today.

SPY OI 20170111

Yesterday, SPY closed at 226.46. You can see 227C was net long from the 3rd row of the charts. SPY popped up this morning and 227C went to ITM.

SPY 20170111 227C Daily

From the daily chart, 227C closed below VWAP 0.60 level yesterday, which means average long holders were under water, therefore, it would be rational to expect those long holders would close the position at VWAP level, 0.60.

SPY 20170111 227C 5min

The intraday chart shows 227C reversed at 0.60 level.

SPY 29179111 227P 5min

Of course 227P had a good swing trade opportunity today.

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Trade ideas for tomorrow

SPY OI 20170111

SPY didn't change much today, but OI did. Actually 226P was bought relatively big today.

SPY 29170111 226P

Most of those 226P was bought today at 0.2 level, ant VWAP is around 0.4.  Those 226P holders may hold the position even after the price exceeds VWAP, because puts are too cheap now. Do you set stop-sell for lottery ticket? I don't.

I'm slightly bearish here.

SPY Option Analysis 20170109

SPY option analysis: week of 20170109

Last week, I wrote a bearish tone of article but obviously I was wrong. The turning point was Wednesday when 0106 SPY 227C started getting squeezed. I usually follow those big option traders but they are not always correct, and once their bets go wrong, the market moves quickly because they need to wind up their big positions.

SPY OI Wednesday

The market would be quiet by Wednesday as price base OIs are small. If there are any battle between bears and bulls, then SPY 227 is a good level as both of call and put are net long at this price, but positions are small so don't expect a big battle.

SPY OI Friday

Friday expirations are slightly bigger than Wednesday, but again those are small and I can't say anything at this moment.  The earning season starts Monday kicked of by AA, but we need to wait for a week to many earning reports kick in, then Trump will officially start his job in the Whitehouse. Do we see another "Buy the rumor Sell the news" thing?

I would stay away from the market this week. Happy Trading.

Shameless Advertisement: Above charts were created by our OptionM8 app. You can download it free from Google Play or iTunes store.

SPY option analysis: week of 20170102

Happy New Year.

We have shorter trade week and some of traders look like they are still sitting on couch eating left over of buche de noel. That said, we are going to have quiet start and the market would pick up from mid of this week.

Now here are charts from Option M8 App:

$SPY OI 0104

From SPY's OI chart for Wednesday, I can see:

• Price based Open Interests(3rd row) are relatively small
• 224P is net long and ATM (at the money)
• 226P is net short and ITM (in the money)
• 227C is net long but OTM (out of the money)

Let's see both 224P and 226P in daily as well as 60min.

SPY 0104 224P

Above is chart of SPY and SPY 0104 224P. Most of 224P was traded on past few dates, and current price is above VWAP, which means "Average 224P long holders are slightly in profit". We can expect dips are buy because those 224P long holders need to take profit which involves Put selling, which is bullish.

SPY 0104 227P

On the SPY 0104 227P chart, we can see current price is above VWAP, so those 227P short holders need to start hedging delta, which is bearish.

I would say SPY would close between 224 and 227 on this Wednesday expiration.

SPY 0106 OI

Things could get changed after Wednesday expiration. 220C is net long and deeply ITM while 224C is net short and ATM.

SPY 0106 224C

Those 224C are belowVWAP that means "average" short holders are in profit. Unless SPY goes up 225 level and above quickly, those short holders would stay so that those calls go worthless.

SPY 0106 220C

"Average" 220C long holders are in red because current price is below VWAP. Those long holders would close their positions as 220C approaches VWAP. This is not a bullish situation.

Conclusion: SPY would stay narrow range by Wednesday expiration with light volume. Dips could be bought, though. After Wednesday expiration, volume would get picked up, but the price would be heavy.

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Morning preview 2016/12/22

This is the review for the second half of this week. Yes, we hate Wednesday expirations!

From this OI chart, I would say most of the big positions were closed, therefore we should expect quiet expiration this Friday. The only exception would be SPY 225C which is net long.

The daily chart of 225C shows the current price is just above VWAP, so we can expect profit taking above this area. The consolidation continues, I guess.

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Those charts are from OptionM8 app. You can download it free from Google Play Store or Apple iTunes.