|May 13, 2016||2053.00||2079.75||2038.50||2042.50|
|May 20, 2016||2041.25||2069.50||2022.00||2050.00|
Commentary for last week
SP500 index dropped near the neckline of H&S pattern and managed to bounce from it. The major traditional options battle line 2050 remains its control line for both side players.
The May monthly range (from 2080 to 2022) will be in play this week.
The 2050 line will continue acting as a magnet for both sides, but slightly favours the upside.
Key economic reports also will largely influence the price this week.
Above 2070 strike price, the 2095, 2100-15 strike price Calls have relatively large open interests. As long as the index doesn’t go below 2035 level and holds up firmly, it could force Puts players to cover and push price back up 2075 or higher to challenge the 2100 level. Our system shows that index and ES shouldn’t close above 2100 level, therefore we look for short Calls when price moves above 2070 level.
Under 2025 strike price, the 2000 strike price Puts have large open interests. The index or ES needs to hold above 1995 level to prevent triggering selling. If breaks below 1990 level, selling momentum could send price down near 1980-75 zone. Our system shows that index and ES shouldn’t close below 1950 level, therefore we look to short the Puts when price goes below 2025.
Nat’s option trades for this week
|Expiration||Strike price||Sell options when Es is|
|Friday May 27, 2016||2110, 2115 calls||> 2070|
|Friday May 27, 2016||1975 puts||< 2025|
|1965, 1950 puts|