Last week here I outlined the three open interest charts for SPY which pinned fairly well for the most part (as you can see at the bottom of this post). Wednesday didn’t pin, but after the 283 calls closed (I showed that via twitter Wednesday morning), the resistance became much less powerful allowing price to rally.

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Last week was off due to all the earnings since the Freebies are only on momentum stocks. The track record since starting freebies are as follows: 

  • 16 wins (I only count wins when they are either big wins or where there was enough time to take profits).
  • 4 that didn’t trigger
  • 6 scratch trades
  • 1 loss

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Open Interest: If you want more information on how to read the high calls and puts in the open interest see here.

SPY-M: (15 of 22 for pins since Monday expiration inception).* Based on where SPY closed on Friday, Monday’s expiation currently would suggest a pin between 280 and 281. However, if price can demonstrate enough strength to hold over the 281 calls then it could also pin at the 282 area where there is also a small build up of puts. If price gets and holds under 280 then it is obviously displaying a great deal of weakness not being able to hold over those puts and getting back under that round number psychological level. In general this open interest suggest a very rangebound stuck SPY for Monday. 

SPY-W: (72 of 98 pins since Wednesday expiration inception).* The current best pin for Wednesday’s expiration is 282, but of course that could change as the week progresses. The more important take away is there is a lot of put support at 280 and 279. If price got under there then there is again two high put strikes at 277 and again at 273. Another thing to note is that if price starts to get under the 280 strike it could lead to delta hedging and a quick move under the 279 puts; however there would then likely be a bit of a pause or maybe end to the down move before the possibility of getting to the 277 puts. To the upside if price gets back over 282 then there is high call resistance from 283 all the way to 287. Once again, as of now this open interest would suggest rangebound price action from 280 to 283.

SPY-F: (57 of 90 pins since I began tracking Friday’s).* Friday also currently has a best pin mat 282 and a range from 281 where the puts start to 283 where the high calls start. Again, because of all the puts at so many strikes under 281 there is a risk that under that level could lead to delta hedging and a fast liquidation down move to around 278; however, that typically happens closer to the expiration date (so closer to the end of the week in this case). To the upside it will be hard for price to hold over the 283/284 level because of all the high calls. 

Pinning Stuff:

*An explanation as to how I define range pinning can be found here. More information about what pinning is can be found under the education section or here.

Monday 7/23:  Successful pin.

Wednesday 7/25: Failed to the upside. 

Friday 7/27: Successful pin.

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