To The Moon

The surprisingly cool U.S. April jobs report stoked hopes for an earlier start to Fed rate cuts, sending the VIX fear gauge to a one-month low and pushing Treasury yields lower. Apple rallied nearly 6%, leading tech stocks higher.

As the S&P 500 gradually rose, options market data showed continued adjustments to hedge put positions by raising strike prices. For QQQ, downside expectations for May were lowered, with a decline of less than 2.7% priced in by May 31st expiration. Small-cap Russell 2000 options saw active buying of calls, implying expectations for the index to trade above 205 by June 21.

Details:

The $SPDR S&P 500 ETF Trust(SPY)$ options overall reflected a bullish trading sentiment, with sellers of put options dominating. Open call interest declined -4.9% over the past 5 days. Open put contracts increased 7.2% over the same period.

For call options, investors' largest opening position was the $SPY 20240507 518.0 CALL$  with a 518 strike, adding 23,000 contracts.

The most sold put option was the $SPY 20240614 405.0 PUT$  with a 405 strike, adding 350,000 contracts as part of a put spread with the $SPY 20240614 450.0 PUT$ . This implies expectations for a decline of less than 12.9% in the S&P 500 ETF by June 14 expiration.

The $Invesco QQQ(QQQ)$ options overall showed a bullish trading sentiment, with sellers of put options dominating. Open call interest increased 1.1% over the past 5 days. Open put contracts grew 1.5% over the same period.

For call options, the most actively traded was the $QQQ 20240524 470.0 CALL$  with a 470 strike, adding 5,850 contracts. This suggests expectations for upside in QQQ to be capped below 6.8% by May 24.

For put options, investors sold the most new $QQQ 20240531 428.0 PUT$  with a 428 strike, adding 7,510 contracts. This implies expectations for a decline of less than 2.7% in QQQ by May 31 expiration.

The $iShares Russell 2000 ETF(IWM)$ options overall reflected a bearish trading sentiment, with buyers of put options dominating. Open call interest grew 5% over the past 5 days, while open put contracts increased 5% over the same period.

For call options, investors sold the most $IWM 20240621 205.0 CALL$  with a 205 strike, adding 10,000 contracts. This signals expectations for IWM to trade above 205 by June 21 expiration.

For put options, investors heavily bought the $IWM 20240621 194.0 PUT$  with a 194 strike, adding 87,000 contracts as part of a put spread with the $IWM 20240621 192.0 PUT$ . This implies expectations for a 4.9% decline in IWM by June 21.