To The Moon

After Fed Chair Powell hinted that the central bank is not in a rush to cut rates, U.S. Treasury yields rose on Tuesday (16th), with the 2-year yield briefly touching 5%. U.S. stocks were volatile before closing mixed, with the S&P 500 and Nasdaq Composite falling for the third straight day, while the Dow Jones snapped a six-day losing streak, led by UnitedHealth.

Options trading data shows diverging investor expectations for the future. SPY options reflect a slightly bullish sentiment, with investors betting on limited upside in the short-term. QQQ options have been bullish on June far-dated calls for two straight days, though remaining bearish near-term. For the small-cap Russell 2000 ETF, investors are primarily defensive, selling put options.

Details:

$SPDR S&P 500 ETF Trust(SPY)$ options overall showed a slightly bullish trading sentiment, with sellers of put options dominating. Open interest in call options grew rapidly, rising 5.7% over the past 5 days. Open put contracts remained above the 52-week average.

For call options, newly opened positions were mainly for options expiring this week, with longer-dated ones quiet. The most actively traded new open interest was the $SPY 20240417 510.0 CALL$ , with a 510 strike expiring April 17th, adding 9,003 contracts.

The most newly bought put option was the $SPY 20240621 455.0 PUT$ , with a 455 strike expiring June 21st, adding 14,000 contracts, implying expectations for the S&P 500 ETF to fall 9.5% by June 21st. For the $SPY 20240426 485.0 PUT$ , the main position was selling, suggesting expectations for the S&P 500 ETF to fall less than 3.9% by April 26th.

The $Invesco QQQ Trust-ETF(QQQ)$ options overall showed a slightly bearish trading sentiment, with buyers of call options temporarily leading. Open interest in call options grew rapidly, rising 9.9% over the past 5 days.

For call options, following Tuesday, investors continued to buy the most $QQQ 20240621 530.0 CALL$ , with the 530 strike expiring June 21st, adding 9,880 contracts, indicating expectations for QQQ to rise about 22% by June 21st.

For put options, investors bought the most new $QQQ 20240426 425.0 PUT$ , with a 425 strike expiring April 26th, adding 12,000 contracts, implying expectations for QQQ to fall 15% by April 25th.

The $iShares Russell 2000 ETF(IWM)$ options overall showed a slightly bullish trading sentiment, with sellers of put options dominating. Both call and put open interest grew rapidly, far exceeding 52-week averages.

For call options, investors bought the most $IWM 20240621 220.0 CALL$ , with a 220 strike expiring June 21st, adding 10,000 contracts, mainly traded during after-hours, indicating expectations for IWM to rise about 12% by June 21st.

For put options, investors sold the most new $IWM 20240517 184.0 PUT$ , with a 184 strike expiring May 17th, adding 72,000 contracts, implying expectations for IWM to fall less than 7.3% by May 17th.