Last week here I showed the high open interest calls on SPY that could act as resistance. For Wednesday the calls were a bit of a deterrent to price and SPY did pin. Throughout the week the SPY Friday open interest that started with lots of high calls were met with many high puts and in the end rewarded several call holders with a less than perfect pin.
SPY-W: (44 of 55 pins since Wednesday expiration inception). The obvious strike that sticks out is 250 which SPY closed over on Friday. If price opens over that level next week I wouldn’t fight it because those calls could easily close out before expiration (and because in case you haven’t noticed it’s been very hard to fight this years’ trend). If price were to gap down and open under 250 or get below there early in the week it would likely not get back over until at least after Wednesday expiration.
SPY-F: (34 of 49 pins since I began tracking Friday’s). In general this open interest suggests that price will close below 251 by Friday’s expiration because of all the high calls at 251 and 252. With that said, if price get over 252 (or gaps over it) then as I said above, I wouldn’t necessarily fight it. It could even help push SPY higher due to delta hedging. However, if price opened below those high calls or quickly fell below them then it would be much more difficult for SPY to get back over them next week. Finally, should SPY rally over the high calls, but then give signs of technical weakness (such as a topping tail), it could be worth shorting for a move back below 251 before Friday’s expiration.
Promotional stuff: If you are a short term trader and have been struggling or you just want to up your game and learn how to incorporate open interest and technical analysis then you want to join SassyOptions Premium services.
- Full premium service includes all day commentary, open interest and technical analysis on ‘in-play’ momentum stocks, and real time trade alerts through my exact entries and exists (meaning I can’t hide behind vague alerts).
- Weekly Open Interest and Strategy Post – Open interest and technical analysis for how to trade AAPL, AMZN, BABA, FB, GS, GOOGL, NFLX, TSLA for this coming week. This does not include my private twitter, exact trades or any other updates.
Wednesday 9/27: successful pin.
Friday 9/29: failed pin.