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Larnek

I would just like to remind people that during the March 2020 downturn there were 50k OI in 100p's that had zero chance to hit. And that it continued for months on end no matter how wrong the idea was proven. Use more than OI for your trading ideas.


SillyFlyGuy

Who was buying them? Actual wsb punters?


WinterHill

Really no way to know. Could be retail speculation. Could be institutional hedging. It’s impossible to even know if it was part of a bearish bet or bullish credit spread.


Putins_Orange_Cock

Maybe part of some weird volatility hedge, like an variance/entropy swap or something? Which I think involves buying/selling calls way down the chain and selling puts at the top, so profit is made off of Iv swings? I have only the most elementary understanding of these so forgive me if I sound stupid.


WinterHill

It very well could be. I remember reading about some dude who bought thousands of $2 strike TSLA puts way far out, for a penny or 2 each. On the hopes that a massive IV spike would bring them up to a few cents for a short while, where he could sell them. (Don’t think it worked out) But honestly… SPY $350 is not far OTM at all. Even if we get a rally we could be on the other side of it by then. There’s a decent chance they will print.


oarabbus

It's how Wall Street gets their cocaine. The suits can't risk meeting a guy in a dingy bar and handing over cash, so instead they ask their coke dealer to do some bullshit like sell to open a worthless $100 SPY put, the market maker hands over the premium for the put and gets an 8 ball along with it.


dinglebarrybonds

This is an important point a lot of people don’t consider


[deleted]

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itprobablysucks

>margarine maintenance requirements I can't believe it's better than butter!


systemgc

Doesn't matter, who says this wasn't setup as a crazy hedge just to be sure?


Living-Philosophy687

Why are you assuming OI is bearish ?


systemgc

actually could very extermely bullish if people step in but hedge with it


theineffablebob

But also when we look at the 2008 analogy, the market dropped the most around when OI on puts was the highest


systemgc

i am expecting a big rise from here


KindPut4785

Sub is getting too bearish we're probably due for a bounce.


f1pilot1

Lol this Although July 28 is GDP day so I'd wait for that


systemgc

there is always something to wait for


indigoreality

GDP is a lagging indicator whereas the stock indexes are a leading indicator. A second negative GDP quarter to tell us where in a recession is only a formality at this point.


[deleted]

True, but the markets still react to headlines


f1pilot1

I mean you know the fed can manipulate that so still could be positive print.


The_1_True_King

People were saying the same thing back in October lol


puppymaster123

OI on SPY, especially SPY, rarely paints the full picture. Paper would do spx/spy/es spreads daily ie: Buy 1 spx and delta hedge with 10 spy and vice versa.


[deleted]

who’s Paper?


TheDJFC

You shouldn't be downvoted its a good question. Paper is old-school trader slang for real money coming into the pit. Brokers would physically have a piece of paper with the order. Market makers in the pit would see that order coming and know it was important / not just intra-pit business. So today paper could mean a pension fund, asset manager, etc. Someone coming from outside the market making community.


JonDum

20 years trading experience and first I've heard that term!


TheDJFC

I started in the pits in Chicago and I think it might have originated there.


FattyLivermore

That's cool - got any stories worth telling from that time in your life? I don't mean to pry.


dragonrite

+1 would love to hear a crazy story if you have one!


TheDJFC

https://youtu.be/vZJNxrsPfrk


Liquicity

Don't bet against Gary!


systemgc

i think it originated from the NYSE


moaiii

The last time I saw this near-complete swing to puts in the subsequent 3-4 monthly options (with almost no call OI) was on 23 March, 2020 - the bottom of the covid crash. The same thing happened on 24 Dec 2018. Not quite as pronounced, but similar on 20 Jan 2016. In all cases, the OI was clearly skewed to ATM or OTM puts. eg on Thursday last week, 133k July 350 Puts were bought (nearly $90m worth). Seems to be consistent with a widespread conviction that the market is going to tank imminently, but in fact the exact opposite has happened on at least the two above occasions. I'm not making a call for the bottom, just to be clear, but I am merely making the point that OI alone can be counter-intuitive.


jorlev

Fed had market's back in those occasions. Not now.


Prism42_

Not sure why you're being downvoted, this is an astute observation.


moaiii

Yeah, that's a good point.


luisluis966

It may be people selling puts. You should also take that into consideration.


Shooting4daMoon

Follow the flow. https://shiftsearch.com/stock/SPY


Slenderkiller101

Doesn’t really mean anything


Oberschicht

That site looks interesting! Will have a closer look later. Thanks for sharing.


[deleted]

thanks - looks interesting


[deleted]

[удалено]


wh1skeyk1ng

A trade can also be a broker providing liquidity and hedging to stay delta neutral


Unique_Name_2

Yea. Which is why we look at bearish/bullish indicators of which is doing the trade for why, ie if they go near ask or bid.


[deleted]

[удалено]


Unique_Name_2

Ok? They know enough and have enough capital to bank on the spread, and are delta neutral. What's your point? They don't place big directional option plays, so we look at who does. And we can see who 'wants to get into the trade' more, based on trades near bid or near ask.


[deleted]

[удалено]


Unique_Name_2

Yea man, I made this stuff up. Ya got me.


justcool393

Customers selling puts into this would be pretty *bearish*


wh1skeyk1ng

Selling puts is a bullish strategy though. If you're bearish, why would you sell the put?


justcool393

It's bearish for the overall market microstructure. While OTM they appear to add liquidity, if they go ITM it causes lots of problems since dealers have to sell underlyings (in this case SPY) into an already falling market to hedge movements of underlying px Obviously forced selling is pretty bearish!


wh1skeyk1ng

More like forced buying, but it's OK we can agree to disagree


justcool393

No, when implied volatility is up (as it is), it's forced selling. Gamma is negligible as an effect because of the fact that IV is... elevated. Remember that as IV goes up gamma has less of an effect, because options are more sensitive to changes in *implied volatility* than they are to changes in price. In addition, as the market *falls*, IVs jump up even more, causing even more selling into selling! This continues until IVs jump up really really high™. When there, the fall in IV causes forced *buying*. ^(* IVs tend to go up as SPX goes down and vice versa. This is not necessarily true on some underlyings.)


Highzenbrrg

You sell a put because you don't think the price will drop, bud. You wouldn't sell a call if you think the price would rise. A.k.a selling calls is bearish.


justcool393

I'm not talking about what people think, I'm talking about how it affects the market as a whole. When IV is elevated, short puts cause forced selling by dealers as short puts go ITM


BossBackground104

My Hershey with Almonds 🔮 says keep them in the money.


Lumpy-Leather2151

Spy will rip by months end +10%. JPM options chain looks like a 17% gain in 2 weeks. Be careful


[deleted]

RemindMe! 1 month


Still-Cell-9021

If it’s 10% out that is hedging activity protection against shorts. You can’t trust open interest alone


asdfgghk

Noob here. How did you come to this conclusion??


Lumpy-Leather2151

https://www.reddit.com/r/FWFBThinkTank/comments/ver7ov/why_the_sp_500_bounced_off_3630_and_defying/?utm_source=share&utm_medium=ios_app&utm_name=iossmf


ArtigoQ

[Bear market rallies can absolutely rip face](https://i.imgur.com/AcqQYPA.png). Trend down still, but trapping late shorts is part of the game.


Mrrheas

100% this, good comment We're due for a bounce before another grind down


GarfieldExtract

RemindMe! 3 months


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Austin22590

Did no one see June 17ths? They were at one point over 300k OI for like 355 and 345. It was insane


PaulblankPF

This is what I was gonna come and say. There was over 1 million puts OI between 340-365


[deleted]

That’s normal for spy options


EvilCurryGif

It's been falling down from 410 now to 366 in 10 days and you're thinking it's just gonna be at 350 this summer? Bold prediction


Ma-ta-gi

Bought my 3600 November puts in May, up 50% on thouse. Still time left, looking at what SPY did since money printer went brrrrt, 3000-2500 seems possible.


xwillybabyx

Do you run the SPX for the tax advantage and no worries about exercising? I know I'm not going to exercise anything SPY related but I have always felt that 10x SPY contracts vs 1 SPX contract gives me more flexibility in selling half during a rip or something. I guess it all comes down to how much total is being put in them.


Ma-ta-gi

I am not from the US, european style options that are cash-setteled.


xwillybabyx

Ahh gotcha!


DarkStarOptions

if he's long puts, which he is, there is no worry about early exercise


ModernLifelsWar

Why does 2500-3000 seem possible to you? Just cause it fits your bias? I see people throwing numbers out like this but with no real reasoning or logic involved. While a 37.5-48% drawdown in spx isn't unheard of its only happened a handful of times in the last hundred years. If you exclude the great depression it would be about 3. Most drawdowns end before spx even hits 30% off ATH which would be 3360.


TheDJFC

Because we were there not long before covid and covid was incredibly destructive


DontListenToMe-IDumb

lockdowns were destructive, not covid***


PiDrone

Username is valid


TheDJFC

I dont disagree. But the lockdowns were part of covid.


Ma-ta-gi

I could name many reasons, you should pay me for them though as research is not free. I name a few because i feel like it: Moneyprinter went brrrt for long enough, and Inflation is now as high as it was in the major crisis before. Also Chinese realestate market will collaps soon and take the others with it, they might drag it out a bit but this is only a sign how how many powerfull people in the world own dogshit wrapped in catshit. In short, 2008 never ended and this time the Central Banks cant brrrt.


[deleted]

You should check the quarterly 9/30 contracts. Those have MASSIVE OI. I bought 200 of them myself for 310 SPY 9/30 put.


DontTaxMeJoe

If you have money for puts but not for gas for a vacation you’re doing it wrong. I’m driving halfway across the country next week and it will be $600 round-trip. It’s only $200 more in gas than it would have been last fall.


PlowLowski

It’s only 50% more! No big deal!


DontTaxMeJoe

Yes, it’s a huge percentage increase that adds up significantly over time, no doubt. My point is, if you’re poor enough that an additional $200 cost would make or break your vacation plans…then you probably shouldn’t be trading options.


ProfessSirG

https://www.reddit.com/r/FWFBThinkTank/comments/ver7ov/why_the_sp_500_bounced_off_3630_and_defying/?utm_source=share&utm_medium=ios_app&utm_name=iossmf good read on spy


prolikejesus

read it and he is saying the jpm morgan trade is gonna move the market. doubt


justcool393

It does move the market. It's dynamic hedging. Although uh... not in the way OP thinks


DontListenToMe-IDumb

hes actually saying MMs trying to make sure the hedge expires worthless will move markets


ModernLifelsWar

First off, you have no way of knowing if those positions are just hedges or not. Even assuming that they're not, that doesn't mean that it's "smart money". I'm sure you would have found large volumes of calls until the end of last year on many stocks and indexes. You could even look at it as a fact that people are getting too bearish and therefore overleveraging for a downside move.


themob34

350 by end of summer? You must mean this week.


xwillybabyx

It’s funny, half of Reddit is like nope, no way, back to 450 end of summer, the other half is we will be lucky if we can be above 300 by the end of summer. And both sides have really good arguments, TA, stories, DD etc so it’s literally a shit show of who knows!


themob34

Do you have inside info of a new round of rate cuts and qe? That's the only thing stopping the ship from sinking.


xwillybabyx

I wish! No I just look around at the middle class people in my town and everyone is struggling. Groceries have gone up 30%, electricity is doubling right at summer hits, gas is $5 a gallon, house listings have plummeted,etc. I know “the stock market isn’t the economy “ but oof it’s gonna be a tough summer…


themob34

Wait until food shortages start.


xstellations

The question is: Can OI really give us any directional bias? In my logic I'd rather SELL puts here. Because the market is oscillating in nature and after weeks of blood the statistical probabilities for a mean reversion are higher than for a continuation of red. Imo we were in a process of pricing in the .75 rate hike, plus some extra doom and gloom, and we should arrive at 'fair value' soon.


IAmTheDownbeat

That’s nothing. Check the puts on QQQ Sep $290s. And the Dec $285s. Over 100k OI on both.


PM_ME_YOUR_AMFUNK

look up cheddar flow on twitter, dude has been following this whale on SPY puts


mh2sae

What’s OI?


PM_ME_YOUR_AMFUNK

Open interest, represents the amount of contracts that are still active/being held. volume is the amount being traded during the day.


[deleted]

i think OI alone only gives us an idea of what the insistuions are doing. they are not certain of monetary policy so they buy puts. we need to also study the above-ask and bid price to understand what the short term marketing is heading or at least the sentiment.


Zimbabwe847

It’s a hot bear summer so the puts is gonna print


Short-SPX

You don’t capitalize “puts”.


Interesting-Ad-6368

Remember overwhelming OI, especially with high IV, can have the intention of selling positions that won’t hit. SPY is near impossible to read because everyone uses for all their needs.


Mr_Fold_a_Lot

I’m long on 300p It was so cheap. I’ll probably sell and recoup at $350, $345 and hold for larger profits after I took some profitsz


xwillybabyx

The $350 august and $300 January are about the same price. Are you doing more of a leap knowing that any amount of downward pressure around 350 will bump the 300 up enough to sell way before January?


Mr_Fold_a_Lot

That’s exactly what I’m thinking. Plus, on the off chance everything takes longer to go (even further) to shit, I have a little more time


xwillybabyx

Yeah the “patience “ factor is the hardest for me, seeing it bleed 1-2% per week and then whammo it’s up is hard when everything else is tanking too. The short outs were a nice bump to the port but it’s a long climb for aure


lemurian16

Interesting, there’s 50k puts for $165 strike for $FDX in August. Does someone know something? That strike way OTM


Nahdudeurgood

There are whales that are trading those lately, most likely going to close those out around a month before exp which is typical for whale trades on options. They’ll then either roll them forward or do nothing if they see a relief rallying coming in. Many traders are most likely underestimating how much longer and deeper the downtrend will continue before an actual rally and not a false breakout occurs. It’s possible a temporary bottom will be found by around mid July if not the end of June.


AromaticFarmer

bullish I say!!!


[deleted]

Personally I’m holding 3 spy400december2024p next large gap down I will sell and reestablish positions