Last week here I laid out reasons why both the bulls and bears should curb their enthusiasm. The open interest suggested that price action would likely be rangebound, with a slight edge to the bulls. As the week progressed and the market moved lower, the open interested shifted a bit not giving much of an edge to either party. In the end the market did close lower and at the lows; score one for the bears. Next week is monthly options expiration and typically the Friday open interest shifts much less throughout the week than for weeklies.
Stocks at 20-day highs: This is oversold.
Stocks at 20-day lows: This is the second time 20 day lows have been this high since the election. Last time they were here the market bounced. The higher this gets the more oversold the market gets and the closer it is to a bottom. If the market bounces from here then there is likely a lower low to come in the next few weeks. 
Open Interest:
SPY-W: (24 of 31 pins since Wednesday expiration inception).* The current best pin is between 234 and 235, but this is the Wednesday expiration and will likely shift especially if there is large price movement early in the week. Their is good put support at 230 and then at 227. Should price fall below 230 and those puts remain high then price will likely come back to close over 230 by Wednesday expiration. To the upside there is very little in the way of call resistance. 
SPY-F: (18 of 26 pins since I began tracking Fridays).* Last week was the first time SPY failed too pin on a Friday expiration since the election (it failed on a Wednesday a few weeks ago). This typically leads to more weakness ahead, but note that it did hold above its highest puts making it a bit less bearish then when it closes under them. The current open interest is similar to Wednesday in that it suggest price will close above the 230 puts by Friday expiration. To the upside there is some call resistance at 235 and then not much until 240. Although both the 235 and 240 levels look like areas where SPY could pin, price often doesn’t pin at the obvious pin strike on options expiration when it’s a monthly, especially when that price is way far out (meaning 235 is a possibility, but 240 is very unlikely).
In sum: The market is currently in the bears hands, but oversold. The open interest for Wednesday and Friday both suggest that price will close above 230 for their respective expirations. I think most traders are aware that the market internals are at a place that typically result in a bottom or large rally and will be looking for a flush to get long. My only concern there is if everyone is looking for it, it likely comes in a different package. Perhaps the drawdown will be worse then anticipated or their will be a gap and go right from the start. Stay on your toes next week and if you want guidance the entire trading week come join us as SassyOptions Premium.
For next weeks open interest analysis, technical levels and ideas for AAPL, AMZN, BIDU, FB, GOOGL, GS, NFLX, and TSLA then you can purchase next weeks strategy piece here (this is separate from my full premium service).
*An explanation as to how I define pinning can be found here. More information about what pinning is can be found under the education section of my site.
Wednesday 4/12: successful pin. The 235 level that had both high calls and puts was put on Tuesday by one entity and thus why I let the range determine the pin. 
Friday 4/13: Failed pin. Although it fell within the range, unlike the Wednesday expiration, this open interest was shaped more naturally as opposed to by one party putting on some type of strategy.
Tags: AAPL, breadth indicators, day trading, max pain, open interest, options, S&P 500, SPX, spy, stock market, stocks, trading, TSLA
April OPEX
Last week here I laid out reasons why both the bulls and bears should curb their enthusiasm. The open interest suggested that price action would likely be rangebound, with a slight edge to the bulls. As the week progressed and the market moved lower, the open interested shifted a bit not giving much of an edge to either party. In the end the market did close lower and at the lows; score one for the bears. Next week is monthly options expiration and typically the Friday open interest shifts much less throughout the week than for weeklies.
Stocks at 20-day highs: This is oversold.
Stocks at 20-day lows: This is the second time 20 day lows have been this high since the election. Last time they were here the market bounced. The higher this gets the more oversold the market gets and the closer it is to a bottom. If the market bounces from here then there is likely a lower low to come in the next few weeks.
Open Interest:
SPY-W: (24 of 31 pins since Wednesday expiration inception).* The current best pin is between 234 and 235, but this is the Wednesday expiration and will likely shift especially if there is large price movement early in the week. Their is good put support at 230 and then at 227. Should price fall below 230 and those puts remain high then price will likely come back to close over 230 by Wednesday expiration. To the upside there is very little in the way of call resistance.
SPY-F: (18 of 26 pins since I began tracking Fridays).* Last week was the first time SPY failed too pin on a Friday expiration since the election (it failed on a Wednesday a few weeks ago). This typically leads to more weakness ahead, but note that it did hold above its highest puts making it a bit less bearish then when it closes under them. The current open interest is similar to Wednesday in that it suggest price will close above the 230 puts by Friday expiration. To the upside there is some call resistance at 235 and then not much until 240. Although both the 235 and 240 levels look like areas where SPY could pin, price often doesn’t pin at the obvious pin strike on options expiration when it’s a monthly, especially when that price is way far out (meaning 235 is a possibility, but 240 is very unlikely).
In sum: The market is currently in the bears hands, but oversold. The open interest for Wednesday and Friday both suggest that price will close above 230 for their respective expirations. I think most traders are aware that the market internals are at a place that typically result in a bottom or large rally and will be looking for a flush to get long. My only concern there is if everyone is looking for it, it likely comes in a different package. Perhaps the drawdown will be worse then anticipated or their will be a gap and go right from the start. Stay on your toes next week and if you want guidance the entire trading week come join us as SassyOptions Premium.
For next weeks open interest analysis, technical levels and ideas for AAPL, AMZN, BIDU, FB, GOOGL, GS, NFLX, and TSLA then you can purchase next weeks strategy piece here (this is separate from my full premium service).
*An explanation as to how I define pinning can be found here. More information about what pinning is can be found under the education section of my site.
Wednesday 4/12: successful pin. The 235 level that had both high calls and puts was put on Tuesday by one entity and thus why I let the range determine the pin.
Friday 4/13: Failed pin. Although it fell within the range, unlike the Wednesday expiration, this open interest was shaped more naturally as opposed to by one party putting on some type of strategy.
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Tags: AAPL, breadth indicators, day trading, max pain, open interest, options, S&P 500, SPX, spy, stock market, stocks, trading, TSLA