To The Moon

Producer Price Index Lower than Expected, Investors Buy on Dips, Tech Stocks Rebound - NVDA Up Nearly 4%, Apple Has Best Single-Day Performance in 2024

The options market has divergent views on the short-term trajectory of the S&P 500 and Nasdaq, but remains cautiously optimistic about the medium-term outlook. However, it is more pessimistic about the performance of individual stocks like Morgan Stanley.

The S&P 500 options market is slightly bullish, but the high open interest in put options reflects market divergence over future movements.

• The major S&P 500 options contracts indicate the index is expected to stay below 522 until next Monday, while a more conservative outlook projects it will remain above the 100-day moving average of 491 by June 21.

• For the Nasdaq 100, new options contracts suggest upside will be capped at 4.3% by May 17. Large call options on the 3x inverse Nasdaq ETF (SQQQ) hint at downside risk for the Nasdaq next week.

• Morgan Stanley options signal pessimism, with expectations of a year-over-year revenue decline in its upcoming Q1 2024 earnings on April 16. Heavy put buying at the 77.5 strike for May 17 expiry suggests increased downside bets.

Details:

The $SPDR S&P 500 ETF Trust(SPY)$ options show slightly bullish trading intent overall, with call buyers leading but put open interest still elevated versus the 52-week average. Put buying spiked this week on lower sticky inflation data, betting on a downturn.

The most active new $SPY 20240415 527.0 CALL$  call is the 04/15 527 strike with 32k contracts added. For puts, it's the $SPY 20240621 491.0 PUT$  06/21 491 strike, 15k new positions.

The largest $SPY$ call spread traded is a sell of the 04/15 522 calls $SPY 20240415 522.0 CALL$  versus buys of the 527 calls $SPY 20240415 527.0 CALL$  , expecting $SPY< 522 by next Monday.

The largest $SPY$ new put trade is selling of the 06/21 491 puts$SPY 20240621 491.0 PUT$  , seeing $SPY> 491 (above 100-day MA) by June 21 expiry.

For $Invesco QQQ Trust-ETF(QQQ)$ , the largest new call buy is the 05/17 460 strike at 13k contracts $QQQ 20240517 460.0 CALL$  . But traded delta shows this position is a sell expecting <4.3% upside by mid-May.

Large 60k lot of $Nasdaq100 Bear 3X ETF(SQQQ)$ 04/19 $SQQQ 20240419 11.0 CALL$  calls were bought outright, signaling Nasdaq downside risk next week.

For $Morgan Stanley(MS)$ earnings due 04/16, the options market is bearish with 20k contracts traded in the $MS 20240517 77.5 PUT$  puts for $1.4m premium, positioning for a revenue miss based on analyst estimates of -0.7% YoY.