To The Moon

Investors are focused on earnings season, with risk sentiment impacted by tensions in the Middle East and hawkish Federal Reserve. Selling intensified in April. The Nasdaq and S&P 500 declined for the fourth consecutive trading day, the longest streak in over four months.

Travelers Companies (TRV) plunged 7.41%, becoming one of the biggest drags on the S&P 500 and Dow Jones indices. United Airlines soared over 17% after forecasting stronger-than-expected numbers for the quarter, boosting the NYSE Arca Airline index by 3.82%, its best single-day gain since February 6.

Options market trading data show that investors are starting to take both long and short bets. S&p 500 options have a bullish bias, and investors are buying straddled portfolio games to accelerate short-term shifts. QQQ options are slightly bullish and are expected to have limited downside in the near term. Small-cap Russell 2000 option traders similarly buy a short term accelerated turn in a straddler portfolio game.

Details:

The $SPDR S&P 500 ETF Trust(SPY)$ options overall showed a slightly bullish trading sentiment, with sellers of put options dominating. Open interest in call options grew rapidly, rising 6.2% over the past 5 days. Open put contracts declined -2.0% over the past 5 days but remained above the 52-week average.

For call options, investors bought the most new $SPY 20240517 515.0 CALL$ , with a 515 strike expiring May 17, adding 12,000 contracts. Combined with the SPY 20240517 485.0 PUTs, this forms a straddle strategy, suggesting expectations for SPY to either rally or decline over 6% by May 17.

The most newly bought put option was the $SPY 20240517 476.0 PUT$ , with a 476 strike expiring May 17, adding 40,000 contracts, implying expectations for the S&P 500 ETF to fall 4.8% by May 17.

The $Invesco QQQ Trust-ETF(QQQ)$ options overall showed a slightly bearish trading sentiment, with sellers of call options dominating. Open call interest grew rapidly, rising 12.8% over the past 5 days. Open put contracts declined -0.5% over the past 5 days.

For call options, investors bought the most new $QQQ 20240517 440.0 CALL$ , with a 440 strike expiring May 17, adding 31,000 contracts, suggesting expectations for QQQ to rise about 3.5% by May 17.

For put options, investors sold the most new $QQQ 20240426 410.0 PUT$ , with a 410 strike expiring April 26, adding 48,000 contracts, implying expectations for QQQ to fall no more than 3.5% by April 26.

The $iShares Russell 2000 ETF(IWM)$ options overall showed a bullish trading sentiment, with sellers of put options dominating. Open call interest rose 5.2% over the past 5 days, while open put contracts increased 5.9% over the same period.

For call options, investors bought the most new $IWM 20240517 190.0 CALL$ , with a 190 strike expiring May 17, adding 32,000 contracts. Combined with the IWM 20240517 190.0 PUTs, this forms a straddle expecting IWM to move 5.1% by May 17.

For put options, investors continued heavily selling the $IWM 20240517 184.0 PUT$ , with a 184 strike expiring May 17, adding 50,000 contracts, implying expectations for IWM to fall less than 7.3% by May 17.