Key Economic Data Ahead, Russell 2000 Put Buying Continues

Major U.S. stock indexes opened higher on Monday (29th), led by Tesla and Apple among the mega-caps, though investors remained cautious ahead of the Federal Reserve's latest interest rate decision later this week.

Options market data showed expectations for reduced near-term volatility in the S&P 500, with a decline of no more than 2.9% priced in by May 6th. QQQ expectations were aligned with the SPY. For small-caps, the Russell 2000 options saw continued accumulation of far-dated put positions, implying a potential 5.5% drop by early June.

Details:

The $SPDR S&P 500 ETF Trust(SPY)$ options overall reflected a bullish trading sentiment, with sellers of call options dominating. Open call interest declined -1.1% over the past 5 days. Open put contracts fell -0.4% over the same period.

For call options, investors bought the most new $SPY 20240501 520.0 CALL$  with a 520 strike expiring May 1, adding 30,000 contracts. Combined with the SPY 20240501 515.0 CALLs, this call spread caps potential upside at 1.3% by early May.

The most sold put option was the $SPY 20240506 493.0 PUT$  with a 493 strike expiring May 6, adding 15,000 contracts. This suggests expectations for the S&P 500 ETF to decline no more than 2.9% by May 6.

The $Invesco QQQ(QQQ)$ options overall showed a bullish trading sentiment, with sellers of put options dominating. Open call interest increased 1.3% over the past 5 days. Open put contracts grew 6.4% over the same period.

For call options, investors sold the most new $QQQ 20240503 444.0 CALL$  with a 444 strike expiring May 3, adding 19,000 contracts. This implies expectations for QQQ upside to be capped below 3% by early May.

For put options, investors sold the most $QQQ 20240510 410.0 PUT$  with a 410 strike expiring May 10, adding 4,200 contracts. This suggests expectations for a decline of less than 4.8% in QQQ by mid-May.

The $iShares Russell 2000 ETF(IWM)$ options overall reflected a bearish trading sentiment, with sellers of put options dominating. Open call interest grew 5.9% over the past 5 days, while open put contracts increased 5.0% over the same period.

For call options, the most actively traded was the $IWM 20240719 208.0 CALL$  with a 208 strike expiring July 19, adding 6,499 contracts.

For put options, investors heavily bought the $IWM 20240621 187.0 PUT$  with a 187 strike expiring June 21, adding 25,000 contracts. This signals expectations for a 5.5% drop in IWM by June 21.