Option trades – week of July 4, 2016

Last week

Week endingOpenHighLowClose
June 24, 20162071.002119.501999.002018.25
July 1, 20162013.752100.751981.502096.25

Commentary for last week

An over-reaction to the Brexit news made the SP500 index hit the monthly low last Monday, but the market soon found its footing and pushed the price back above 2035 to trigger the buying programs. The short squeeze helped the SP500 index recover most of the loss occurred on Monday

Last week’s trades

160701-ES-60a

ESU6 July 1, 2016. 60-minute bars

The 100-point dump in the S&P500 after the British referendum results began being published set the stage for a couple of nice option plays last week.

At the start of the week, with continuing declines and more confusion in the market, the Puts were well-bid and we were able to get decent prices for far out-of-the-money Puts. .

After the market bounced off the lows and started recouping the losses, traders developed lots of interest in buying Calls.

Our trigger for selling Calls (2070) was touched on Wednesday, and there was still enough time premium left to produce fair prices for our 2115 Calls.

Everything we sold expired out-of-the-money and we retained th entire premium.

This week:

This is a short trading week due to July 4 Independence Day holiday on Monday. Also there are relatively few economic reports. The Index could try to hold above 2035 level and challenge the 2100 level and its all-time high close (2131).

Member content

 

Hi . Here are the option trades for this week.

Calls:

Above 2075 strike price, The 2100, 2120-30 and 2165-75 strike price calls have large open interests. As long as index doesn’t go above 2075 level, it likely tries to hold up SP500 index from falling and struggles to move above 2100 level to test old highs. Our system shows that index and ES shouldn’t close above 2175 level, therefore we look for short calls when price moves above 2135 level.

Puts:

Under 2075 strike price, the 2050, 2025 and 2000 strike price puts have large open interests. It indicates those puts may help index to hold up. But it also shows that price could be sold hard if index goes under 2025 level to trigger selling program. Our system shows that index and ES shouldn’t close below 1990 level, therefore we look for short the puts when price goes below 2035

Put/call volume ratio on SPX and ES July 8 option is 1:3 from 2175 to 2075 level, and 5:1 from 2075 to 1925 level.

Nat’s option trades for this week

ExpirationStrike price Sell options when ES is
July 8. 20162165, 2175 callsabove 2135
2155 calls
Meanline 2080
July 8. 20161995 putsbelow 2035
1975 , 1965 puts

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