Open Interest for Expiration 3/18/16 (open)

This was one of two premium posts last weekend for members.

Fairly volatile week. In the end, the bulls had the edge and the dips were bought, as I mentioned was the bias going into the week. We were very patient and very disciplined – thus, rewarded. Next week is monthly OPEX so the majority of the open interest will not change and will have more sticking power unless we get a very outsized move.

For right now, the bulls still have the edge, but looking at some of the open interest my logical thinking says that either we pull back at the start of the week or at the end of it if too many stocks get over their high calls. My caveat is there is another scenario I am seriously thinking might take place. I think next week could bring a huge move higher that results in a short term blow off. The issue with this scenario is if stocks fly out of the gate  it means they will either just keep going without giving another entry or it will be a trap and gains will be given back. Thus, if I do buy breakouts next week (as opposed to pullbacks), I would only do it if breadth is consistent with a trending up day.

SPY: The only thing that sticks out is the high puts at 195 and the high calls at 200. Since price is already over 200 and there is support at 201, price may never breach 200. If it doesn’t then it may add fuel to a large move due to delta hedging. Thus, unless price closes below 201 we assume higher. If price does get below 200 then we see how far lower it goes. If it begins to get toward 197 it would definitely be a buy the dip upon the first touch. If on the off chance it falls below 197 it might quickly get to 195 due to delta hedging. 

AAPL: The current best pin is 100 and there is strong resistance at 105. As I mentioned last week, AAPL doesn’t get over its high calls for months and then does it for a few weeks in a row. It has now done it two weeks in a row so it’s possible there will be a third, but given that there is only a few points to swing, I don’t see the set-up as being that great to the upside unless price gets back to 101.50, holds and then heads back higher again. If price can get over 105, I see potential for buying puts.

AMZN: Clearly there is 550 support and 570 resistance. The best risk/reward trade next week is to buy calls under 550 or puts over 570. I wouldn’t do this on a Monday or Tuesday because the open interest could change and the premium is high, but if by Wednesday the open interest looks the same then it has higher odds of working out. In terms of technicals there is 550 support and 583 resistance.

BIDU: There is not much take away from the open interest except that 200 will be resistance. I like this to the long side next weak over 182. On Friday it broke its pin, which is not unheard of with BIDU as I explained last week. I think this can have a big move next week and definitely on the radar for a long. I would like to try to get it closer to 180/181, but if there is no pullback I may still go long.

FB: Just like AAPl, FB will not break its high calls for months and then have a few week run. Last week looks like it may have done that as it did break its pin. If it gets over 110 then I think it’s worth trying for calls with a tight stop at 109.42 (Friday’s high). Will watch it early in the week. Obviously a failure to remain above 110 and it likely will struggle the rest of the week to get above it.

GOOGL: We have clear parameters to start with. Support at 720 and resistance at 750. This one that is also a buy below 720 and sell above 750, but not at the start of the week because of possible changes. If GOOGL can break 750 and remain solidly above it then the next resistance is 762.

GS: This is one chart that should give us pause because of all the calls that begin at 150. Although GS hasn’t been as great of a barometer as in prior years it is still something I like to take notice off. Currently this suggests a pin of 150 and lots of resistance at many strikes above. This can definitely change though if the 3rd scenario I mentioned above takes place. Thus, for now we should note that it could spell a pullback in the market instead of a higher market. Also if it does get much higher than 155 early in the week and weakness comes in after FOMC it could be a short.

LNKD: It’s pretty much remained in a range for over a month now. I don’t see an edge except if price gets over 120 in which it provides a short opportunity. I would also be interested in buying a pullback at 106 if it gets there next week. With that said, if price gets over 122 and the market is very strong, I think it finally gets to 128. In fact if the blow off scenario seems to becoming into fruition I may buy calls for that possibility.

NFLX: I have said for weeks that I think it has lower to go this year before bottoming. However, it continues to catch a bid on every pullback so far; yet it also fails on every strong rally. It might pin at at 95 next week, but NFLX doesn’t pin well so I’m not going to try to bank on that. If it falls below 95 then it could end up hitting the 90 puts, but those would act as huge support. Don’t see much edge there for next week at this point given its unpredictability.

TSLA: It’s been a monster since the initial drop after citron downgraded it. Currently the best pin is either 200 or 210. I would be interested in buying this under 200 and possibly over 210, but the risk/reward in premiums would have to be right for me to do that over 210. Plus the daily chart is forming an ascending wedge and those typically break to the downside, but timing has to be great.