Option trade, week of July 18, 2016

Last week

Week endingOpenHighLowClose
July 8, 20162099.752125.502065.752120.75
July 15, 20162120.252168.002120.002146.00

Commentary for last week

SP500 index had a yearly range breakout move last week and pushed price to make new highs. At the end, it closed at 2161.71 level on Friday, and confirmed its breakout.

Last week’s trades

160715-ES-60aVery easy and profitable option trades this week.

The market moved above Nat’s trigger for selling Calls (2135) in the pre-market on Monday, and stayed above that level the entire week, giving us lots of opportunity to sell Calls at increasing premiums as the market moved up.

But the ES never reached Nat’s first strike price at 2170, all of the options we sold expired out-of-the-money and we kept the entire premium. Classic.

This week:

Member content

This section contents the specific option trades for this week.

Hi . Here are Nat’s option trades for this week.

Due to ultra-short-term overbought condition, the index could have a minor pullback move and retest its breakout level around 2135 area, or further down around 2100-90 zone. Nevertheless the pullback could be bought again by speculators. See the Weekly Preview for the details.

Calls:

Above 2150 strike price, there are more Calls contracts bought at 2180 and 2220 level. Index price could be dragged up to those levels if the buying momentum shows strong. But profit taking also could be seen there. Our system shows that index and ES shouldn’t close above 2230 level, therefore we look to sell Calls when price goes above 2160.

Puts:

Under 2135 strike price, the 2075 to 2050 strike Puts have some open interest. It indicates few hedges by the index future contract buyers. As long as the price stays above 2075 level, it should not change the short-term uptrend direction. Our system shows that the index and ES shouldn’t close below 2020 level, therefore we look to sell Puts when the price goes under 2135.

Put/call volume ratio on SPX and ES July 22 option is 1:2.5 from 2200 to 2135 level, and 1:1 from 2150 to 2020 level.

Nat’s option trades this week

ExpirationStrike price Sell options when ES price is
July 22, 20162210, 2220 Callsabove 2160
07/22/20162200 Calls
Meanline 2135
July 22, 20162075 Putsbelow 2135
2065 , 2055 Puts

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