Open Interest for Expiration 4/15/16 – open

This was one of two premium posts  for members posted before week starting 4/11/16

Well the weak wasn’t as calm as I expected even though it basically closed in the same place as it did on Tuesday. I can’t argue that there was lots of movement to be played though. Next week is monthly OPEX and usually the open interest doesn’t shift as much as it does for weeklies, but I do think we will see more changes than usual next week because some of the charts just seem so empty.

Overall, if there was a theme it would be there is lots more calls, but further up then where prices actually are. Often that can be a bearish omen and I actually would be surprised if SPY 204 continued to hold the market up. Thus, I am currently leaning bearish next week, but don’t expect a crash or anything given that earnings is just getting underway. Also, if price does remain above 204 then I will remain flexible with the bearish thesis.

SPY: Very hard to make much of this as the current best pin is small in terms of volume and the only thing we have to go by is the 200 puts. So for now we assume that over 204 is bullish territory. Under 204 is bearish with support below at 202.50, 201 and then of course 200. If we do indeed remain above 204 it has a clear path higher in terms of open interest. From a technical perspective 205.85 (Friday’s high) would be the first hurdle and then 207.

AAPL: So here we do have a very prominent pin. The only issue is that it is all the way at 100. Thus, the market would really have to be weak or news would have to take it down. Having said that it definitely didn’t close pretty on Friday. There is a gap to fill at 107.79. If it can get below there the next stop would likely be 106.50, 105, and then 103.85. We are in the 105 puts so let’s see how it acts on Monday. If it does hold above 107.79 and that 100 pin doesn’t pull it back then it could end up a long because there is no call resistance up above, but I wouldn’t go long as the risk/reward isn’t great.

AMZN: It recently has shown pretty good strength, but with all those 600 calls lined up, it likely struggles. If it can power over them early in the week the open interest may shift, but as of now this is likely signaling a pullback or failure to stay over 600 if it gets above it. For now, we can view it as a potential short till we see if momentum is able to shift the open interest. Support (and potential short targets) are 583 and 570.

BIDU: Glad I didn’t get sucked back into this one beyond the quick calls we made a small profit on. Next week the open interest suggests nothing unless it has a huge rally and gets near 210 (doubt it). In terms of technicals, there is strong support at 181 and resistance at 187. In between is just chop. Below 181 targets would be 176 and 172. 

GOOGL: a few weeks in a row now it struggles to get over its high calls. Next week there isn’t any till 780 so there is a potential short zone if it gets there. However, since it closed at 759 we may not get that chance. Under 755 and it likely has a 10 point drop. Under 744 and I think it gets to 736. In between 755 and 772 is chop.

GS: Banks begin reporting next week and even though GS doesn’t it definitely could have an impact on the stock. For the most part, expectations are extremely low for bank earnings. The only thing open interest shows is the 160 calls which is pretty far above where price closed. Under 148.50 for GS could get ugly. It would really need to get over 158 to look somewhat healthier. Maybe the earnings are baked in for banks and they will surprise to the upside, but for now I think better not to make any assumptions on that. If anything the market might be trying to tell us something by not letting financials rally with the rest of the market. That could be an important message. 

FB: Pretty nasty candle on Friday suggests there is likely more downside to come before earnings. Once again there isn’t much information in the open interest because there is just high call strikes pretty far above. A retest of 112 next week I think would be a good short opportunity with 108’ish as a first target, then 107 and possibly 105.5 depending on how weak it is. I would not get long except for a bounce near 105.

LNKD: What a dog last week. Glad I sold half or our calls early on. As I said last week, the bollinger bands are very tight and although I thought the break would be to the upside, unless this is a false breakdown it’s obviously to the downside. It really needs to break 106 to keep dropping. Next week if it breaks 106, there could be an opportunity to play it short, but it would have to remain under 106. If it takes it out and then goes back up and through 109/110 it may be a long. In between 106 and 109’ish there really is no trade. On the other hand if it pops first to 109/110 without first dropping below 106 then it’s likely worth getting puts. The open interest is similar to many of the others with calls up higher so it isn’t really helpful unless it starts trading up to 115.

NFLX: Very prominent pin at 100. NFLX is notorious for not pinning so take it for what it’s worth. Under 103 and it does likely get to 100. But if it can remain above 103 then 105 and 107 could be a target. It might just hang around in a range till earnings since they are only a couple weeks away.

TSLA: It’s finally showing some weakness. The technical range is 240 to 260. If it can get and stay under 240 then it probably is a short to 227 or 220. The 220 should act as support at least on a first touch. Over 260 targets 268 and 272, but I wouldn’t chase it. Until the range breaks though 240 might be worth calls and 260 worth puts.