S&P 500 Rebound Target 5100, Continued Bets on 5% Decline Longer-Term

With Middle East tensions easing, investors await tech giants' earnings reports and key U.S. inflation data as the S&P 500 reclaims the 5,000 level, ending a six-day plunge. Tech stocks led the broader market rebound, as investors pinned hopes on whether the "super earnings week" can live up to lofty AI expectations.

Options market data shows narrowing expected gains for the S&P 500 options, with gains under 2.2% by May 10th. QQQ's expected trading range widens, with continued buying of straddle combinations. Small-cap Russell 2000 options see increased bets on longer-dated put options, suggesting a potential 5.6% decline before June.

Details:

For the $SPDR S&P 500 ETF Trust(SPY)$ options, the overall traded sentiment is bullish, with selling of put options dominating. Open interest in call options has declined by -9.2% over the past 5 days, while put open interest has decreased by -17.2%.

The most heavily bought call option is the $SPY 20240510 509.0 CALL$ , with a strike of $509 expiring on May 10th, seeing an increase of 23,000 contracts, suggesting expectations for SPY to trade above $509, a 2.2% gain over two weeks.

The most heavily sold put option is the $SPY 20240621 473.0 PUT$ , with a strike of $473, implying expectations for a 5% decline in the S&P 500 ETF by June 21st.

For the $Invesco QQQ(QQQ)$ options, the overall traded sentiment is bullish, with selling of put options dominating. Open interest in call options has decreased by -1.2% over the past 5 days, while put open interest has declined by -10.4%.

The most heavily bought call option is the $QQQ 20240621 500.0 CALL$ , with a strike of $500 expiring on June 21st, seeing an increase of 22,000 contracts, suggesting expectations for QQQ to rally around 19.6%.

The most heavily traded put option is the $QQQ 20240426 377.0 PUT$ , with a strike of $377 expiring on April 26th, seeing an increase of 17,000 contracts. The $QQQ 20240517 410.0 PUT$  expiring on May 17th saw an increase of 12,000 contracts, paired with the $QQQ 20240517 410.0 CALL$ , forming a straddle combination.

For the $iShares Russell 2000 ETF(IWM)$ options, the overall traded sentiment is bullish, with buying of put options dominating. Open interest in call options has decreased by -15.3% over the past 5 days, while put open interest has declined by -5.8%.

The most heavily sold call option is the $IWM 20240517 180.0 CALL$ , paired with the $IWM 20240517 180.0 PUT, forming a combination trade.

On the put side, investors heavily bought the $IWM 20240517 186.0 PUT$ , with a strike of $186 expiring on May 17th, seeing an increase of 35,000 contracts, implying expectations for IWM to decline 4.6% by May 17th. The $IWM 20240621 184.0 PUT$ , with a strike of $184, saw an increase of 25,000 contracts, suggesting expectations for IWM to decline 5.6% by June 21st.