Option trades, week of Aug. 22, 2016

Last week

Week endingOpenHighLowCloseVolume
(million)
Aug. 12, 20162176.002185.252167.752181.256.2
Aug. 19, 20162180.752190.752165.502182.507.9

Commentary for last week

SP500 index remained in a sideways channel. Both resistance and support were holding last week. It is typical of an indecisive market.

Last week’s trades

160819-ES-60a

ESU6 Aug. 19, 2016. 60-minute bars.

Straightforward but profitable week for option traders. The price hit Nat’s trigger for selling Calls early in the week, when there was still reasonable time value remaining, and generated enough enthusiasm from the long side to move the premium up.

By the end of the week the market was well below the strike price, the options expired out of the money, and we retained the entire premium. Almost a textbook case.

This week:

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This section contains the specific option trades for this week. It is reserved for paid subscribers.

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Hi . Here is the option information for this week.

A breakout move could be seen this week. Short-term indicators are neutral at the current stage. Last week’s range from 2195 to 2165 also could be repeated in the early days of the week. The direction of breakout will become important for the next ultra-short-term move, especially if the weekly closing price falls below 2165. That could trigger a short-term and intermediate-term correction.

Calls:

Above 2185 strike price, there is a large volume of Calls bought at 2200-05 and 2220-25 levels. The Index could struggle to move up there if the 2175 line is holding up. But the upside has limits. Our system shows that index and ES shouldn’t close above 2235 level. Therefore we look to sell Calls when the ES/Index price goes to the 2195 area.

Puts:

Under 2175 strike price, in the 2175-35 zone strike price, the Put and Call volume is roughly equal. It hints we could see a fast down to and pop from the 2135 level if the Index breaks below 2170 level. The 2130-to-2090 are has more Puts bought. A move below 2125 could drop the Index down further. Our system shows that index and ES shouldn’t close below 2125 level. There we look to sell Puts puts when the price goes to the 2165 area.

Put/call volume ratio on SPX and ES Aug. 26 option is 1:5 from 2225 to 2175 level, and 1:1 from 2165 to 2135 level, and 5:1 from 2125 to 2050 level.

Nat’s option trades for this week

ExpirationStrike price Sell options when ES price is
Aug. 26, 20162220, 2225 callsaround 2195
2210calls
Meanline 2185
Aug. 26, 20162110 putsaround 2165
2095 , 2085 puts