To The Moon

Market confidence in an upcoming Fed rate cut increased after US data showed job openings declined in April, followed by the ADP jobs report showing May private payrolls rose far less than expected with prior figures also revised lower. Both reports indicated cooling in the US labor market.

Options flows showed expectations for SPY to trade below 560 by the weekend close. QQQ was expected to stay between 460 and 470 through July 19 expiry. Small-caps remained volatile with expectations for a 2.9% rally in IWM by June 10.

Details:

The S&P 500 ETF (SPY) saw open call interest rise 0.4% over the past 5 days. Open put contracts increased 1.2% over the same period.

For call options, investors sold the most $SPY 20240607 560.0 CALL$  with a 560 strike, adding 8,278 contracts. This implied expectations for SPY to trade below 560 by June 7 expiration.

For put options, the most actively traded was the $SPY 20240719 510.0 PUT$  with a 510 strike, adding 9,449 contracts.

The Nasdaq 100 ETF (QQQ) saw open call interest rise 1.4% over the past 5 days. Open put contracts increased 1.3% over the same period.

For call options, investors sold the most $QQQ 20240719 470.0 CALL$  with a 470 strike, adding 18,000 contracts as part of a spread vs the $QQQ 20240719 460.0 PUT$ . This implied expectations for QQQ to trade between 460 and 470 through July 19 expiration.

The Russell 2000 ETF (IWM) saw open call interest rise 1.7% over the past 5 days, while open put contracts were unchanged over the same period.

For call options, investors bought the most $IWM 20240610 208.0 CALL$  with a 208 strike, adding 18,000 contracts. This priced in around 2.9% further upside for IWM by June 10 expiration.

For put options, there was heavy buying in the $IWM 20240719 192.0 PUT$  with a 192 strike, adding 26,000 contracts. This priced in around 4.4% downside for IWM by July 19 expiration.