Option trades – week of Nov. 7, 2016

Last week

ESZ6 prices to week ending Nov. 4, 2016
Week endingOpenHighLowCloseVolume
(million)
Oct. 28, 20162137.002149.752112.502123.756.9
Nov. 4, 20162120.002130.502078.752081.5011.6

Commentary for last week

The SP 500 index experienced orderly selling for a week. It not only lost the Sept/Oct monthly support zone 2120-18, also it lost a psychological support line at 2100. The index suffered a 1.93% weekly loss, closing at 2085.18.

Last week’s trades

161104-es-60aThe ES stayed below Nat’s meanline all week, an indication the direction would continue down.

Her trigger for selling Puts was hit on Tuesday and again of Wednesday, inciting a little enthusiasm for the 2075 Puts we were offering,

The market continued down, but ended the week well above the strike price, and we retained the entire premium.

This week:

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Hi . Here are the option trades for this week.

This week is US election week. “Sell the rumor, buy the news” could cause the index to have a big swing move. The index itself has three weekly option expirations (Nov. 7, 9 and 11), and ES has two on Nov. 9 and 11. Index just dipped into last year’s consolidation range (2134 to 1982) last week, but hasn’t broken down that range low level yet. So far index still is in its testing move. 1980 level will be expected to hold up the index in the short term.

Calls:

Above 2100 strike price, most Call contracts bought were shown at 2125, 2150-60 and 2175 strikes. The lower of those strike prices could be touched if election result come out within people’s expectation, and the index manages to hold the price above 2020 through the first three days. Our system shows that index and ES shouldn’t close above 2185 level, therefore we look to sell Calls when ES pops up near 2130.

Puts:

Under 2100 strike price, the 2075, 2060- 50, 2030-20 and 2000-1990 strikes Puts were bought heavily last week. 2100 level will become a very important line for this week. A move above it could lead index price to have a short squeeze move. Our system shows that index and ES shouldn’t close below 1980 level, therefore we look to sell Puts when ES goes below 2020 area.

Put/call volume ratio on SPX and ES Nov. 11 option is 1:2 from 2100 to 2175 level, and 9:1 from 2090 to 1980 level.

Nat’s option trades this week

ExpirationStrike price Sell options when ES price is
Nov. 11, 20162150, 2165 callsNear 2130
2125 calls
Meanline 2100
Nov. 11, 20162020 putsbelow 2020
2000 , 1990 puts

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