Option trades, week of Aug. 29, 2016

Last week

Week endingOpenHighLowCloseVolume
(million)
Aug. 5, 20162174.002178.502140.502177.507.9
Aug. 12, 20162176.002185.252167.752181.256.2
Aug. 19, 20162180.752190.752165.502182.507.9
Aug. 26, 20162181.752191.502157.502167.258.6

Commentary for last week

SP500 index has had a modest pullback since Aug. 3, 2016. The reaction to Mrs. Yellen’s speech at Jackson hole was mainly negative.

Last week’s trades

160826-ES-60a

ESU6 Aug. 26, 2016. 60-minute bars.

Not much action last week. The long wait for Yellen’s speech at the Fed’s Jackson Hole conference kept traders out of the market until Friday.

A few enthusiasts may have been tempted to sell Calls when the price spiked on Wednesday, but it never reached Nat’s trigger at 2195.

Her trigger to sell Puts was not reached until Friday, when the time premium had evaporated. No option sales, no profits.

This week

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This section contains the detailed buy/sell levels for this week. It is reserved for paid subscribers. Previous weeks are free.

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Hi . Here are the option trades for this week.

A breakdown of the 2165.50 level triggered selling orders, and the index subsequently hit 2160 and ES hit 2157.50. But the decline halted and the price reversed to close above 2165.50 level last week.

It suggests 2155 will be a key zone, and likely to be retested this week. High volatility should be expected. The index has 3 option expiration days this week, Aug. 29, Aug. 31 and Sept 2. The option activity could drag the price up and down around its major strike price.

Calls

Above 2155 strike price there are large volumes of Call contracts bought at 2185-90, 2200 and 2220-25 levels. Index could struggle to move up there if the 2155 line is holding up. But upside has limited room due to the large number of Call contracts. Our system shows that index and ES shouldn’t close above 2210 level, therefore we look to sell Calls when the price goes around the 2180 area.

Puts

Under 2155 strike price, the 2150-40 zone strike price Puts were bought heavily last week. It hints we could see price have a fast down and reverse move if index breaks below 2135 level. The 2100 to 2075 level Puts also have large open interests. Those levels could act as support, but also could cause price to decline fast if 2095 level is broken. Our system shows that index and ES shouldn’t close below 2115 level, therefore we look to sell Puts when price goes below the 2145 area.

Put/call volume ratio on SPX and ES Sept. 2 option is 1:2 from 2220 to 2155 level, and 4:1 from 2155 to 2095 level.

Nat’s option trades for this week

ExpirationStrike price Sell options when ES price is
Sept. 2, 20162210, 2220 callsaround 2180
2200 calls
Meanline 2155
Sept. 2, 20162095 putsaround 2145
2085 , 2075 puts