Options: Week of Apr. 6, 2015

Nat’s trades this week:

ExpirationStrike price Sell when ES price is
Apr. 10, 2015 2110, 2115 calls
2100 calls> = 2060
Meanline 2050
Apr. 10, 20151985 puts< = 2025
1975, 1965 puts

Commentary for the week Mar. 30, 2015

Last week was the combination of the end and beginning of the month, the week and the quarter. The market was fully influenced by Fed members’ speeches and economic data. ES barely held up for a small gain for the quarter. points.

This week – April 6:

The ES is likely to move lower early this week before the FOMC minutes for March are released. Historically the mid-month option expiration tends to hit the high or low for the month, and the weekly option preceding it — the weekly options that expire this week — has a tendency to thrash around, bumping the price and squeezing the premium. We expect that kind of activity this week.

Calls:

2050 is the option mean line this week. 2060 is the current resistance line. As long as ES stays below the 2060 level, the short-term trend remains down. Our system shows that ES shouldn’t close above 2100 this week. Therefore, we should look for selling calls if there is a chance for ES to move above 2055.

Puts:

There are lots of puts outstanding below 2000 this week. A move below 2015 will increase selling pressure and cause the ES price to drop toward the 2005-1995 zone or lower to 1985-75. Our system shows that ES shouldn’t close below 1960 level this week. Therefore, we could look for selling puts if ES drops near the 2020 level.

Put/call volume ratio on ES April 10 option is 1:2 from 2135 to 2050 level, and 4:1 from 2050 to 1950 level.