Quite honestly I don’t know what to say or think about last week; after having alerted on the bearish option flow on the SPY in particular all week. And then to see the Paris attacks unfolding Friday afternoon, just took the joy of trading away. And being on the right side of the market, feel like the wrong side. I love Paris, have good friends there, and have many fond memories and many footsteps over there.
But trading is trading, we need to keep our emotions out of it. So, on to business.
starting with the Optionsflow :
Friday saw a dramatic increase of Put buying, both front end and next week’s (this coming Friday) expiration.
At this point we’re only interested in the 11/20 expiration, following is a chart depicting the at or above the ask trades for both Calls and Puts for the 11/20 expiration only.
On a suggestion, and a little help of one of our members (thanks Idris!) I am now also going to post charts based on strike price.
Below is the SPY chart depicting the at or above ask option trades with 11/20 expiration by strike.
As mentioned in an earlier post, the amount of strikes for which I’m collecting data is somewhat limited; 7 OTM and 4 ITM strikes, as per the yesterday’s close of the underlying stock. SPY closed at 204.84 on Thursday, therefore on Friday the application monitored the 203 through 208 calls. and the 201.5 through 206.5 Puts.
Per comparison below is the same chart, but now showing all optiontrades, not just the at or above ask.
SPY on a daily chart shows how Friday’s close is below an entry for a possible CD leg lower.
TD-pressure was in a heavy bearish divergence up to the recent high, and we’ll have to watch it if it can get into oversold territory. And if SPY can get back over 204.25 this entry signal will be disqualified.
On a 60min chart, we see that SPY is at a significant support.
FB a picture perfect PRZ reversal on the daily chart. Mentioned this in previous posts/twitter a couple of times. The trendline or the 38.2%XA retrace can offer support. We have seen tremendous bullish optionflow, up to the highs. I will watch the optionflow closely if it remains bullish, or that now Put buying is going to increase.
GOOG as wel a PRZ reversal
For next week I will watch SPY on the 60min chart and see if it can reverse here at the 161.8 and lateral support, and if it can regain 204.25 in the next couple of days. If not, then we’ll start trading puts out of bearish PRZ’s of smaller timeframes. the opposite as we have been doing since the start of October.