To The Moon

Market attention has shifted towards earnings season, with the U.S. stock market extending its rally. Spotify's stock surged 11.4% after exceeding Wall Street's first-quarter expectations and issuing an optimistic second-quarter guidance. Delivery giant UPS rose 2.4% after beating profit forecasts.

Option market data shows that S&P 500 options continue to bet on far out-of-the-money put options, with call open interest shrinking, expecting a 5% decline over the next 2 months. QQQ options continue to bet on far out-of-the-money puts, expecting volatility over 3.7% before May 17th. Small-cap Russell 2000 options continue to add far out-of-the-money put positions, anticipating a potential 4.5% decline by June.

Details:

$SPDR S&P 500 ETF Trust(SPY)$ options composite trade intent is bullish, with put selling dominating. Call open interest has decreased -9.1% over the past 5 days. Put open interest has declined -14.2% over 5 days.

For calls, investors bought the most $SPY 20240503 525.0 CALL$ , strike 525, expiring May 3rd, adding 8,992 new contracts, expecting a 3.9% gain before May 3rd.

For puts, the most bought was $SPY 20240621 480.0 PUT$ , strike 480, expiring June 21st, adding 36,000 new contracts, forming a put spread with $SPY 20240621 460.0 PUT$ , anticipating the S&P 500 ETF will decline 4.9% by June 21st.

$Invesco QQQ(QQQ)$ options composite trade intent is bullish, with put selling dominating. Call open interest decreased -5.7% over the past 5 days. Put open interest declined -6.8% over 5 days.

For calls, investors bought the most $QQQ 20240517 425.0 CALL, strike 425, expiring May 17th, adding 16,000 new contracts, forming a straddle combination with $QQQ 20240517 425.0 PUT, indicating expectation of over 3.7% volatility in QQQ before May 17th.

For puts, the most traded was $QQQ 20240503 400.0 PUT, strike 400, expiring May 3rd, adding 17,000 new contracts, suggesting expectation of a 6% decline in QQQ before May 3rd.

$iShares Russell 2000 ETF(IWM)$ options composite trade intent is bullish, with put buying dominating. Call open interest declined -15.2% over the past 5 days, put open interest declined -5.6% over 5 days.

For calls, investors bought the most $IWM 20240510 221.0 CALL$ , strike 221, expiring May 10th, adding 17,000 new contracts, forming a call spread with $IWM 20240510 213.0 CALL$ , implying expectation of IWM upside capped below 8% by May 10th.

For puts, investors heavily bought $IWM 20240621 188.0 PUT$ , strike 188, expiring June 21st, adding 7,155 new contracts, implying expectation of a 4.5% decline in IWM by June 21st.