To The Moon

Impacted by hawkish Fed rhetoric, strong economic data, and rising Treasury yields, the S&P 500 saw its first five-day losing streak since October 2022 this week. Semiconductor stocks sold off heavily, with the Philadelphia Semiconductor Index plunging, hurt by TSMC's downbeat outlook weighing on overall chip growth expectations.

Options market data showed diverging investor expectations for the future. S&P 500 options reflected slightly bullish sentiment, but upside was expected to be limited near-term. Nasdaq options had a slightly bearish tilt, with investors positioning for relatively contained downside risks. For small-caps, Russell 2000 options trading indicated bullish sentiment, with investors mainly taking defensive stances by selling puts.

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 5.6% over the past 5 days. Open put contracts declined -2.6% over 5 days but remained above the 52-week average.

For call options, investors bought the most new $SPY 20240430 500.0 CALL$ , with a 500 strike expiring April 30, adding 17,000 contracts, suggesting expectations for SPY to trade above $500 by April 30.

The $SPY 20240517 500.0 CALL$  with a 500 strike expiring May 17 added 12,000 contracts. Combined with the $SPY 20240517 500.0 PUT$ , this forms a strangle expecting SPY to trade below $500 by May 17.

The most newly bought put option was the $SPY 20240517 430.0 PUT$ , with a 430 strike expiring May 17, adding 24,000 contracts. Combined with the $SPY 20240517 460.0 PUT$ , this forms a put spread expecting the S&P 500 ETF to fall 8% by May 17.

The $Invesco QQQ(QQQ)$ options overall showed a slightly bearish trading sentiment, with sellers of call options dominating. Open call interest grew rapidly, rising 14.6% over the past 5 days. Open put contracts declined -2.6% over 5 days.

For call options, investors bought the most new $QQQ 20240419 428.0 CALL$ , with a 428 strike expiring April 19, adding 15,000 contracts, suggesting expectations for QQQ to rise about 1% by Friday.

For put options, investors sold the most new $QQQ 20240517 350.0 PUT$ , with a 350 strike expiring May 17, adding 28,000 contracts, implying expectations for QQQ to fall no more than 17% by May 17.

The $iShares Russell 2000 ETF(IWM)$ options overall showed bullish trading sentiment, with sellers of put options dominating. Open call interest rose 5.7% over the past 5 days, while open put contracts increased 5.1% 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 17,000 contracts. Combined with the $IWM 20240517 190.0 PUTL$, this forms a straddle expecting IWM to move 5.1% by May 17.

For put options, investors heavily sold the $IWM 20241018 170.0 PUT$ , with a 170 strike expiring October 18, adding 33,000 contracts, implying expectations for IWM to fall less than 11% by October 18.