Using Put/Call Open Interest to Predict the Rest of the Week
Posted: Mon Oct 15, 2012 6:15 pm
Referring to following article, I would like to know on what it means.
Does it mean which price causes the most pain, the price will get there at the Options expired date?
Does anyone have any suggestions?
Thanks in advance for any suggestions
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Here’s the theory: the market conspires to cause the most pain, to cause the most number of people to lose the most amount of money. If the market is to accomplish this, what does it need to do this week?
Puts out-number calls more than 2.5-to-1, so bearish sentiment remains high.
Call OI is highest between 108 and 115 with spikes at 110, 112 and 115.
Put OI is highest from 100 to 112.
There’s some overlap in the 108-112 area, but since puts far out-number calls, let’s focus on those to determine where price needs to close Friday to cause the most pain. With SPY closing at 108.26 today, a close right here would expire about 60-70% of the puts worthless, but to really cause a lot of pain, a move to the top of the high-put-open-interest zone near 112 would be better. Hence, a move up the rest of the week is needed.
Does it mean which price causes the most pain, the price will get there at the Options expired date?
Does anyone have any suggestions?
Thanks in advance for any suggestions
---------------------------------------------------------------
Here’s the theory: the market conspires to cause the most pain, to cause the most number of people to lose the most amount of money. If the market is to accomplish this, what does it need to do this week?
Puts out-number calls more than 2.5-to-1, so bearish sentiment remains high.
Call OI is highest between 108 and 115 with spikes at 110, 112 and 115.
Put OI is highest from 100 to 112.
There’s some overlap in the 108-112 area, but since puts far out-number calls, let’s focus on those to determine where price needs to close Friday to cause the most pain. With SPY closing at 108.26 today, a close right here would expire about 60-70% of the puts worthless, but to really cause a lot of pain, a move to the top of the high-put-open-interest zone near 112 would be better. Hence, a move up the rest of the week is needed.