Options – week of Nov. 30, 2015

Commentary for last week

Prices for ESZ5 for week ending Nov. 27, 2015
Week endingOpenHighLowClose
Nov. 272089.752098.252065.502090.00
Nov. 202006.502094.501998.502088.75

A very short week, due to the Thanksgiving holiday in the US, but  that didn’t stop the buyers from jumping on every dip.

The favourable seasonality for stocks encouraged the buyers. At the same time the angry break between Russia and Turkey encouraged European investors to move some assets intro the safe haven of the US. That’s a trend that may continue, despite the high value of the US dollar.

Last week’s option trades

Zero. Nat’s trades last week called for selling Calls if/when the ES rose above 2110, and selling Puts if/when the ES dropped below 2050. Neither trigger was hit and we stood aside for a week that had only three real trading days and a very limited range. No irrational exuberance to exploit.

This week:

This week is a combination week. It is the classic end and beginning of month bullish period. But external uncertainties may cool the bulls and the price may go sideways early in the week with a breakout movement later. ES December contract only has three weeks left to expiration. Volatility could be increased.

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Here are Nat’s option trades for this week.

Calls:

There were lots of Calls bought above the 2075 strike. The 2095 level will be the key line for this week. As long as ES stays above 2075, the buyers will keep pushing ES up to 2115-2110 zone or higher. Our system shows that ES could be pushed up to 2135 level , but it shouldn’t close above 2165 level, We are looking to sell Calls when ES moves above 2105 level.

Puts:

The Puts have been heavily bought below the 2045 strike price. If ES moves under 2045, it could cause the balance to swing swiftly toward the downside, and push the price lower toward 2025-05 zone. Our system shows that ES shouldn’t close below 2000 level, therefore we look to sell Puts while ES is below 2065 line.

Nat’s option trades this week

ExpirationStrike price Sell options when ES price is"
Dec. 4, 20152155, 2170 calls
2135 callsAbove 2105
Meanline 2095
Dec. 4, 20152025 putsBelow 2065
2000 puts