Bullish on QQQ, Further Put Buying in Russell 2000

Investors awaited Nvidia's earnings report after the bell to see if the AI chip giant can sustain this year's stock market rally. The Federal Reserve's latest policy meeting minutes were also due for release later, with investors scanning for clues on the rate path ahead.

Options flows revealed active trading in upside calls, pointing to a bullish view on the S&P 500 for May, though longer-dated put positioning continued building. QQQ still had around 2% further upside priced in, while small-caps saw expectations capping the Russell 2000's rally below 5.7% by June expiration.

Details:

The S&P 500 ETF (SPY) saw open call interest rise 0.6% over the past 5 days. Open put contracts increased 0.7% over the same period.

For call options, investors bought the most $SPY 20240524 547.0 CALL$  with a 547 strike, adding 8,068 contracts. This implies expectations for a 3% rally in SPY by May 24 expiration.

For put options, the most sold were $SPY 20240719 470.0 PUT$  with a 470 strike, adding 15,000 contracts. This suggests expectations for SPY's downside to remain capped below 11.5% by July 19 expiration.

The Nasdaq 100 ETF (QQQ) saw open call interest rise 2% over the past 5 days. Open put contracts increased 1.7% over the same period.

For call options, investors bought the most $QQQ 20240621 465.0 CALL$  with a 465 strike, adding 14,000 contracts. This prices in around 2% further upside in QQQ by June 21 expiration.

For put options, the most actively traded was the $QQQ 20240719 405.0 PUT$  with a 405 strike, with 9,950 contracts traded.

The Russell 2000 ETF (IWM) saw open call interest rise 2.1% over the past 5 days, while open put contracts increased 1.4% over the same period.

For call options, investors sold the most $IWM 20240621 220.0 CALL$  with a 220 strike, adding 18,000 contracts. This caps expectations for upside in IWM below 5.7% by June 21 expiration.

For put options, there was heavy buying in the $IWM 20240719 198.0 PUT$  with a 198 strike, adding 26,000 contracts. This implies expectations for a 4.8% decline in IWM by July 19 expiration.