Option trades – week of Oct. 10, 2016

Last week

Week endingOpenHighLowCloseVolume
(million)
Sept. 30, 20162156.252168.252132.752156.7511.1
Oct. 7, 20162158.752164.002136.002146.508.1

Commentary for last week

The SP 500 index continued trading inside its daily triangle range last week. But the weekly range got narrower than its prior week.

Last week’s trades

161007-es-60

ESZ6 to Oct. 7, 2016. 60-minute bars.

Another narrow weekly range, sideways movement contained within the triangle pattern, no irrational exuberance to push the premiums up. No option trades last week.

This week:

The index has 3 option expiration days ( Oct, 10, 12 and 14), and ES has two option expiration ( Oct 12 and 14) this week. These option expirations could continue to lead index and ES to have a sideways move with some kinds of spiking in both directions.

Calls:

Above 2155 strike price, most calls contracts bought were shown on at 2190 and 2200 levels. Those strike prices are likely acting as short-term resistance level. Our system shows that index and ES shouldn’t close above 2210 level, therefore we look for short the calls when price pops up to near 2190 area.

Puts:

Under 2150 strike price, the 2125 and 2100 strike price puts contracts were bought heavily last week. As long as Index stays above last week’s low at 2136, the puts buyers have to unload their positions and help to hold up index price. But index goes under 2125, sellers could push price down lower near 2125-2100 zone to search for support. Our system shows that index and ES shouldn’t close below 2075 level, therefore we look for short the puts when price goes below 2125 area.

Put/call volume ratio on SPX and ES Oct. 14 option is 1:3 from 2200 to 2155 level, and 3:1 from 2155 to 2100 level.

Nat’s option trades for this week.

ExpirationStrike price Sell options when ES price is
Oct. 14, 20162210, 2215 callsNear 2190
2200 calls
Meanline 2155
Oct. 14, 20162100 putsBelow 2125
2075 , 2065 puts