Bears Make Their Move, Betting on SPY Pullback to 565!

$SPDR S&P 500 ETF Trust(SPY)$

The bears have finally arrived!

On Monday, SPY saw large put buying: 20,000 contracts of March 21, 2025 puts with strike price 565 $SPY 20250321 565.0 PUT$ .

Calculating from the strike price suggests a 5.8% pullback. However, there's another interpretation - even if it doesn't reach 565 (less than 5.8% drop), a panic sell-off could spike volatility, making these puts profitable.

The correction range will determine its duration. A 5.8% pullback would likely take over two weeks, similar to April. A sub-5% correction could complete in a week, like September.

To clarify, SPY typically sees spread trades (call or put spreads) since index movements are more stable than individual stocks. Single-leg puts or calls are rare and signal significant moves.

Those holding stock positions should hedge now by buying January at-the-money puts.

This correction will likely affect both US and Chinese markets.

$iShares China Large-Cap ETF(FXI)$ shows massive call option closures, mostly institutional orders expiring December-January.

ASHR saw large put buying: 44,000 contracts of April 17, 2025 puts with strike 23 $ASHR 20250417 23.0 PUT$ 

Historically, US-China market corrections are highly correlated, so hedging is advised.

$NVIDIA(NVDA)$

Institutions rolling short positions, selling 135 calls and buying 139 calls. No rebound expected this week.

Selling $NVDA 20241220 135.0 CALL$ 
Buying $NVDA 20241220 139.0 CALL$ 

NVIDIA needs put hedging now; don't rush to buy dips as it may hit 120. Monday saw 66,000 contracts opened for this week's 142 puts $NVDA 20241220 142.0 PUT$ .

For hedging, I bought January at-the-money puts $NVDA 20250117 128.0 PUT$  ("at-the-money" means strike price equals stock price).

Note: AVGO will also pull back. Monday's rise relied on Friday's squeeze; Tuesday lacks additional catalyst. This week's options volume is far below last Friday.

$Tesla Motors(TSLA)$

Weekly short sellers again capitulated before victory, forced to roll positions:

Selling $TSLA 20241227 505.0 CALL$ 
Buying $TSLA 20241227 545.0 CALL$ 

Wait for the correction before buying Tesla puts.

$GameStop(GME)$

GME showing unusual activity: Monday saw 20,000 January 125 calls purchased $GME 20250117 125.0 CALL$ 

I suspect company action coming, though timing is awkward. Worth a small position to see what develops.