Option trades – week of Dec. 5, 2016

Last week

Week endingOpenHighLowCloseVolume
(million)
Nov. 25. 20162179.502211.752178.502211.256.0
Dec. 2, 20162208.002213.752184.252191.009.6

Commentary for last week

The S&P500 index had a minor pullback last week due to short-term overbought condition. But price still closed above its breakout point and held up well in a fairly narrow range.

Last week’s trades

161202-es-60a

ESZ6 to Dec. 2, 2016. 60-minute bars.

No option trades last week. The underlying security (ESZ6) traded within a narrow consolidation range in the early part of the week. By the time it broke out of that range Thursday there was almost no time premium left.

We were spectators, not speculators last week.

This week

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This section contains the option trades for the coming week. It is reserved for paid subscribers. You can see previous option trades free of charge in the archives.

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Hi . Here are the option trades for this week.

This will be an active week for economic reports but the Open Interest at major strike prices is less than before. Christmas is coming. The option meanline will be 2195 level. A move above that could push the price up to 2220-50 zone. Staying under it could lead the index to battle around the 2185-2150 zone. The SP500 index has three option expiration days on Dec 5, 7 and 9th and ES has two on Dec 7th and 9th.

Calls:

Above the 2195 strike price, most Calls were bought at 2200 and 2210 towards 2230-50 strike levels. As long as the index holds above 2185, the index could struggle to hold and slowly move up. Our system shows that index and ES shouldn’t close above 2250 level; therefore, option traders should look sell Calls when ES moves above 2205 or higher.

Puts:

Under the 2175 strike price, Puts were bought more than Calls at the 2150 and 2130-20 strikes last week. A move below 2175 could cause price to fall further. Our system shows that index and ES shouldn’t close below 2120 level; therefore we look to sell Puts puts when ES goes below 2175 area.

Put/call volume ratio on SPX and ES Dec. 9 option is 1:5 from 2250 to 2200 level, 2:1 from 2195 to 2150, and 4:1 from 2145 to 2100 level.

Nat’s option trades for this week

ExpirationStrike price Sell options when underlying price is ...
Dec. 9, 22162265, 2275 callsAbove 2205
2255 calls
Meanline 2195
Dec. 9, 22162130 putsbelow 2175
2120 , 2105 puts

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