Option trades – week of Sept. 6, 2016

Last week

Week endingOpenHighLowCloseVolume
(million)
Aug. 26, 20162181.752191.502157.502167.258.6
Sept. 2, 20162167.752183.752154.752179.258.96

Commentary for last week

SP500 index had a narrow range week again. Mainly it spent lots of time to wait for NFP report on Friday. US non-farm payroll data was under expectation, and knocked off the Fed rising rate on Sept off the table. Index recovered early loss and gained 10 points for weekly closing.

Last week’s trades

120902-ES-60a

ESU6 Sept. 2, 2016. 60-minute bars.

The market opened the week at Nat’s trigger point for selling Calls, and stayed there for two days, which gave us lots of time to sell our 2200 Calls.

The price dropped, but subsequently returned to our entry level, but never came to cloe to our 2200 strike price. The options expired OTM and we retined the entire premium.

This week

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This section contains the detailed buy/sell levels for this week. It is reserved for paid subscribers. Previous weeks are free.

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Hi . Here are the option trades for this week

The index has 3 option expiration this week (Sept 6, 7 and 9). ES has only one on Sept. 9. Price could be driven up and down within last month’s range (2191.50-2141.50). The 2165.50 level controls downside and the 2185.50 controls upside. Price should contain inside the August monthly range.

Calls

Above 2185 strike price, most of the Calls bought were shown at 2200 and 2210-20 levels. Index could struggle to move up there if 2185.50 line is broken to the upside. But upside room still has limits due to lack of strong momentum. Our system shows that index and ES shouldn’t close above 2225 level, therefore we look to sell Calls when price goes to the 2187 area.

Puts

Under 2180 strike price, the 2150-40 strike Puts were bought heavily last week. As long as Index stays above 2140 line, the index will try to hold up. However if the index breaks below 2120 it could trigger an unbalanced run on the downside. Our system shows that index and ES shouldn’t close below 2115 level, therefore we look to sell Puts when price goes below 2150 area.

Put/call volume ratio on SPX and ES Sept. 9 option is 1:2 from 2220 to 2175 level, and 5:1 from 2175 to 2095 level.

Nat’s option trades for this week

ExpirationStrike price Sell options when ES price is ...
Sept. 9. 20162210, 2220 Callsaround 2187
2205 Calls
Meanline 2185
Sept. 9. 20162115 Putsaround 2150
2105 , 2095 Puts