The volume buying on the SP500 Holders (SPY) and the Powershares QQQ Trust (QQQQ) occurred again today at the open and in the last half hour of the day. The five minute charts of these look impressive if you have access to these.
I am looking at the SPY put open interest from 130-136 and there are a lot of puts that will expire worthless above 1360. The call open interest doesn’t pick up until around 140. I doubt the put writers want all those to end in the money and I would not be surprised to see a push higher into next Friday.
As discussed last night, the SPX bounced off the 1:1 ascending angle and is now at the 1:1 descending angle. This should provide some level of short term resistance. I’ll add more in my Weekend Outlook by Sunday night.
Post Modified: July 3rd, 2008 at 12:36 am
Tags: QQQQ · Standard and Poor's 500 (S&P500) · Volume2 Comments
2 responses so far ↓
On Wednesday of this week, I had told daily subscribers that the OEX $-weighted Put/Call was showing signs of folks paying up for puts even as there were more calls being bought. Now, with the OEX P/C ratio, we know that these players are generally not a fade, EXCEPT when they are paying up. Basically, the less sophisticated folks pay too much for options while the smart money does not. On Wednesday, the smart money was buying cheap calls, while the “dumb” money was buying expensive puts. That was a warning of a possible low. Now, we not only have that same configuration, but now better. Basically ALL the major index and ETF $-weighted P/C’s are way up there. Folks are paying two, three, and four times as much for puts as for calls. That’s not bad news.
Gary - Thanks much for the info. Feel free to post a link to your service as it may be useful for others here (and me). I am not an options expert but I heard a lot of talk about it this week. I looked myself last night and it is obvious that for the SPY and QQQQ there are a lot more puts in trouble than calls that would be in-the-money with a move higher. I also see the the COTS pros are buying and the retail players are dumping en mass.