Why Wall Street Should Be Watching SPY 206

The SPDR S&P 500 ETF (SPY) is nearing $206, which could prove a critical level going forward

by Alex Eppstein

Published on Dec 24, 2015 at 11:10 AM

For the second day in a row, the SPDR S&P 500 ETF Trust (SPY) continues to churn just below the $206 level. Specifically, the exchange-traded fund (ETF) was last seen off 0.2% at $205.72, after earlier topping out at $206.08.

Going forward, this will be a key area to watch. As you can see in the chart below, which summarizes open interest levels on the January 2016 series of options, the 206 strike is the nearest strike in which call open interest outweighs put open interest. By the numbers, about 80,000 calls are in residence, versus 40,000 puts.

151224spy

As we've mentioned in the past, call-heavy strikes can often act as magnets for the SPY, which seems to work in bulls' favor. However, they can also act as ceilings, as the hedges related to these long positions sell shares heading into expiration to remain neutral.

Compounding the critical nature of SPY 206 are a number of technical levels. For starters, year-to-date breakeven rests at $205.59, just below the ETF's current perch. For another, as the chart below demonstrates, several significant trendlines are now in the $205.50-$206.50 range. In other words, a decisive move above or below this area could help dictate the SPDR S&P 500 ETF Trust's (SPY) direction moving forward.

151224spy2


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.
First Week in April Provides More Coronavirus-Related Volatility
A slew of coronavirus-related news sent markets on another weekly roller coaster ride
Netflix Stock Heading into Historically Bullish Quarter
NFLX's 10-day moving average has stepped up as support lately
The Latest Investor's Guide to Precious Metals
Learn how to protect savings and maximize returns by investing in precious metals.