{"id":8318,"date":"2015-02-17T16:53:01","date_gmt":"2015-02-17T21:53:01","guid":{"rendered":"http:\/\/leavittbrothers.com\/blog\/?p=8318"},"modified":"2015-02-17T16:53:01","modified_gmt":"2015-02-17T21:53:01","slug":"using-putcall-open-interest-to-predict-the-rest-of-the-week-54","status":"publish","type":"post","link":"https:\/\/blog.leavittbrothers.com\/?p=8318","title":{"rendered":"Using Put\/Call Open-Interest to Predict the Rest of the Week"},"content":{"rendered":"

Options expire this week, so let’s check out the open-interest on SPY, QQQ and IWM to see if they hint at movement the rest of the week. Here\u2019s the theory: the market conspires to cause the most pain, to cause the most number of people to lose the most amount of money. If the market is to accomplish this, what does it need to do this week?
\n<\/span>
\nSPY<\/strong> (closed 210.08)<\/span>
\n\"\"
\nPuts out-number calls 2.1-to-1.0. <\/span>
\nCall OI is highest between 210 and 216, with a huge spike at 215.<\/span>
\nPut OI is highest in 5-point increments between 165 and 190 and then is steadily heavy up to 206.<\/span>
\nThere is no overlap between the highest open-interest regions – calls are heavy above 210 and puts are highest below 206. A close somewhere in the middle would cause a lot of pain, and with no overlap, there’s no sense pinpointing an exact level. Today’s close was at 210.08 – at the top of the range. A move up from here would enable some call buyers to make money, we need so flat or down trading<\/strong> the rest of the week to accomplish max pain. <\/span>
\nQQQ<\/strong> (closed 106.96)<\/span>
\n\"\"
\nPuts out-number calls 1.4-to-1.0. <\/span>
\nCall OI is highest between 101 and 108.<\/span>
\nPut OI is highest between 95 and 105. <\/span>
\nThere’s definite overlap between call and put OI between 101 and 105. The total open-interest in this region between the two is approx. the same, so a close somewhere near the middle (103-ish) would cause the most pain (without knowing where or when the options were purchased). Today’s close was at 106.96 – way above the max pain level. This isn’t a surprise; QQQ is sitting at its highest level in 15 years. A big move down<\/strong> is needed to cause max pain. Without it, call buyers are going to cash in this month. <\/span>
\nIWM<\/strong> (closed 121.71)<\/span>
\n\"\"
\nPuts out-number calls 2.2-to-1.0. <\/span>
\nCall OI is highest at 120, 121 and 122. <\/span>
\nPut OI is highest between 105 and 120 with a big spikes at 105, 113, 115 and 116. <\/span>
\nThere’s no overlap between the two regions of highest OI, but the two zones do share 120 as a common strike. A close there would cause most calls and puts to expire worthless and would therefore be max pain for option buyers. Today’s close was at 121.71 – too high. A move down<\/strong> is needed. <\/span>
\nOverall Conclusion:<\/strong> If the invisible hand of the options market worked to cause max pain among option buyers, a move down<\/strong> is needed. SPY can sit were it is, but IWM needs to move down, and QQQ needs to move down a bunch. Otherwise call buyers will make money this month. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Options expire this week, so let’s check out the open-interest on SPY, QQQ and IWM to see if they hint at movement the rest of the week. Here\u2019s the theory: the market conspires to cause the most pain, to cause the most number of people to lose the most amount of money. If the market […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts\/8318"}],"collection":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8318"}],"version-history":[{"count":0,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts\/8318\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8318"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8318"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8318"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}