To The Moon

The latest U.S. inflation data came in broadly higher than expected, reinforcing speculation that the Federal Reserve won't be rushing to cut interest rates. This poured cold water on market expectations for a potential Fed rate cut as soon as June. Major U.S. indices opened lower and declined, with the 10-year Treasury yield spiking close to 4.5%. The hotter-than-expected inflation weighed on stocks amid diverging investor views on the Fed's policy outlook. The S&P 500 futures (SPY) options market showed an overall slightly bullish trading bias, with call option open interest rising further, but put open interest remained elevated above its 52-week average level. Due to key CPI data and Fed minutes releases this week, new options positioning was mainly concentrated in options expiring this week. The top two new call option trades were sellers, suggesting expectations for SPY to gain no more than 1% on Wednesday. For Pinduoduo (PDD), options data showed large buy orders in the September 20th expiry 140 strike calls, implying around 16% upside expected. Details: SPY options overall assessment reflected a slightly bullish trading bias, with call open interest rising further while put open interest remained above its 52-week average. Due to CPI data and Fed minutes this week, new positioning was focused on this week's expiries. The largest new call opener was the $SPY 20240410 527 CALL$ with a 527 strike expiring April 10th, seeing 23,000 new opens. The biggest new put opener was the $SPY 20240517 492 PUT$ with a 492 strike expiring May 17th, with 19,000 new opens. The top two new call openers were sellers, suggesting expectations for SPY to gain no more than 1% on Wednesday. The top two new put openers were option spreads - the $SPY 20240517 492 PUT$ was the sell side while the $SPY 20240517 489 PUT$ was the buy side, implying expectations for SPY to drop no more than 5.2% over the next 38 days. $Pinduoduo (PDD)$ S&P rating agency stated that China's e-commerce industry growth has stagnated, competition has intensified, and consumers are becoming more cautious with spending. Credit positions for Alibaba, JD.com and Vipshop remain unchanged for now. China's e-commerce giants are growing increasingly concerned about Pinduoduo's development as it gains more market share. Options activity showed large buy orders in the $PDD 20240920 140 CALL with a 140 strike expiring September 20th, implying around 16% upside expected.