Based on the call option flows, the price action next week could resemble last week's, especially considering Friday's non-farm payrolls may disappoint expectations. So the $110-$130 range still looks viable.
Last week, institutions rolled their covered call spread position higher:
Sold $NVDA 20241004 123.0 CALL$
Bought $NVDA 20241004 128.0 CALL$
For Tesla, they mentioned the delivery report could impress, so covered call sellers may want to wait until after those numbers.
For FXI, there are still no notable bearish flows. The focus remains on covered stock strategies like selling calls or buying protective puts, as well as bullish call spreads.
In other words, volatility is expected to subside, with a grind higher likely before any major downside. Not yet time to get outright bearish.
The major covered stock flow sold the November $34 calls on KWEB: Sold $KWEB 20241115 34.0 CALL$ with 25,000 contracts traded.
Interestingly, a bullish call spread was also opened for the same November expiry, but with higher strikes:
Bought $KWEB 20241115 35.0 CALL$ (40,000 contracts)
Sold $KWEB 20241115 39.0 CALL$ (40,000 contracts)
The positioning is quite similar - one just a bit more aggressive than the other. Both seem to expect further upside, even if it's just the final fish-tail of the move. But this fish-tail could have a long tail.
Outright bullish call options may not be as optimal. Covered stock or option spreads tend to offer a better risk/reward from current levels. This applies to not just the ETFs but individual Chinese tech names as well.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Great article, would you like to share it?