So Friday is Options Expiration and I figured it's time to look and see where there may be a potential pin and I found something altogether different.
Take a look at the SPY Call/Puts in the option chain....
Puts.....
Do you see what I see?
On the calls, there is very little open interest below $115 with the PUTS there's very little open interest above $122. So clearly the option buyers have been bullish.
By my rough calculations, a close below $122 on Friday will wipe out 1.2 million calls and add to it if the SPY moves down. The open interest in calls below $115 average around 35k per level, so you an see where the incentive is on the calls.
As for the Puts, a close below $122 wipes out over 5 million contracts, so they can take price down several points still and wipe out a lot of contracts. Puts over $125 average around 20k contracts at each level so they con't lose much. Again, I don't know where the pin would occur, but taking the market lower is more beneficial then higher by a pretty wide margin. Of course you could really look at each level just below $122 and probably find the max pain, but this is one time when the bets where all lined up in such a way that it seems that the crowd may be way off base and cluttered together in an area that makes them a prime target.
If any of our options traders take a closer look at the chain and have an opinion (as I see it as kind of a wash when looking quickly at is), let me know what you come up with.
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