Open Interest for Expiration 4/8/16 – Open

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

Awesome week! For now the bulls are still in charge, but at this point there is likely to be limited upside before either a pullback or consolidation. Earnings are just around the corner and until they get underway, dips will very likely be buyable. Let’s get straight into the open interest.

General note for the momo’s below: As of now I don’t see great opportunities to get long if the market begins to move higher at the start of the week. A pullback or consolidation period first would lead to better opportunities among most of these. If there is upside at the start to the week and many stocks move above their high strikes then it would likely lead to a short opportunity.

SPY: As of right now the range is 204 to 207. Price closed at 206.92 and thus a push over 207 without internal (breadth) confirmation will likely be a short opportunity. Should a trending up day with confirmation lift the market then their will likely also be a shift in the open interest. There is technical support near 205.30 and then open interest and technical support at 204. As long as price remains above 204 bulls have the short term edge. As of now it seems SPY will likely be choppy and rangebound. Hence we should prepare for next week to potentially be slow and require lots of patience.

AAPL: The highest calls is at 110. Last week they were at 105, but the strength of the buying was able to shift the open interest (also why I stopped out of the puts and went long). Thus, unless we see further strength over 110 in a similar way to last week, expect either a pullback or sideways action. I would be interested in buying calls at 107.80 (the gap fill). 

AMZN: Technically this is very bullish looking and has room to run to 620 where there is lots of calls. I wouldn’t buy calls on this Monday morning if it broke out over 603, but after some consolidation and when premium gets cheaper I probably would (hopefully it happens later in the week). A pullback to 584 is also a great buy opportunity. Anything over 620 will likely not hold unless the open interest shifts.

BIDU: A very tricky stock to trade lately with the highest calls currently at 195. Although that doesn’t always stop BIDU, based on its false breakouts lately the only opportunity I see is buying dips on it. Support at 188 with a strong market would be a good place to try for a long. Failure to remain above 188 opens the door to 186 and 183. Over 192 and it likely sees 195. If BIDU trades over 192 and doesn’t give back gains in the afternoon (as it perpetually does lately), then it might be worth calls as it would finally be a shift in its charter. 

FB: Price closed at 116 over the high 115 calls. The next resistance areas are 117 and 120. FB may be on its few weak tear where it is able to get over its high calls, thus despite the high strikes it does remain on the watch list for a long. Having said that, it would be better to try for calls on a pullback under 115 or to wait till the end of the week to try longs. When it does run over its calls it usually happens at the end of the week (just like last week).

GOOGL: Another stock that showed a lot of strength last week. Once again the volume on each strike is fairly muted, which has been a theme lately on GOOGL. Because of that I don’t see the open interest as very relevant yet. From a technical perspective over 770 and there is a good chance GOOGL sees 782. There is support at 758 and 751. I don’t see much edge at its current price but will see if any good set-ups arise as the week unfolds. 

GS: On its daily chart a rounding bottom is unfolding and the stock definitely looks like it’s heading higher over the next few weeks. Right now there is call resistance at 160, but any further strength and I think the open interest won’t become an issue next week. A pullback, to 157/158 that isn’t a trend down day in the market would be a good place to initiate a long. A consolidation between 160 and 162 would also lend to a long opportunity and probably a shift in the open interest. 

LNKD: Just like GOOGL the open interest has so little volume I don’t see it as relevant right now. The bollinger bands are getting very tight and is poised for a large move. I don’t know if that will be up or down, but as of now I lean toward higher. I will be looking to enter a long trade near 112/113 or over 116 next week. This is one of my favorites next week. It’s crazy that I like it long now because  most of you remember how much I hated this stock and knew it was trading way too high when it was over 200. Now my nemesis is CMG :-).

NFLX: This one has strength on its side. It also has earnings in a few weeks and it tends to run up into earnings. I mentioned last week that over 103 and bulls definitely have the edge. Although there are lots of 103 calls stacked up, as long as price remains over 103 it will likely keep going higher. In fact, 103 is probably a good buy point since NFLX is less sensitive to its high calls then some of the other momo’s. It may stall or chop around the 105/106 level for a few days, but once it goes it likely gets to 109. Under 103 definitely puts the breakout into jeopardy next week.

TSLA: Given the insane amount of short interest I am doubtful of any large corrections next week. However, it also is very stretched and likely to base in a range for a while. Currently the highest calls are at 245 which is near Friday’s high. A push above that may give a short opportunity, but I would wait for some type of topping candle because the short squeezes can be brutal. A dip to 226 would be a good place to try calls. A failure to remain above 226 would be more bearish near term. The open interest will likely tighten up toward the end of the week and provide us more clarity for a pin.