Weekly Options Recap 2/15/21

Markets closed the week last week at new all time highs for the second week in a row. The run to new all time highs has been impressive given the negative news cycle that we have been stuck in for months now. We have brushed aside uncertainty around the pandemic, negative economic numbers, and political uncertainty as traders continue to focus on more stimulus from the Fed and Central Banks worldwide.

The volume has not been great the last few weeks on this latest move higher. SPY has struggled to hit 50 million shares traded on a daily basis. This is well below the 80-100 million share range that we have seen historically. The low volume makes sense give the long duration of this move higher. Everyone that wants to be long is long. No one wants to get short or close out of bullish positions given that every selloff has been bought up immediately. As a result we continue to drift higher on the low volume.

The new high on SPY from Friday’s session is at 392.90. Above this level and we will be looking for resistance at 394.00 and 394.50. There is a lot of talk of a move up to 4000 on the S&P 500 but we would love to see a pause first before heading up to that level. It’s only 65 points away from current levels so there is a good chance we hit 4000 in the near future.

Should price start to pullback we will be looking for support down at 388.50 which is the 8 EMA on the SPY daily chart and then 383.50-383.00 which is where the 20 EMA and 20 SMA are located.

The VIX finally closed below 20 on Friday which is the first time we have seen the VIX below 20 in months. We are again seeing historic levels of complacency market wide as no one expects any downside pressure. If the market ever wanted to throw traders a curve ball now would be a great time for a sudden selloff.

We have a holiday shortened week on tap this week as markets are closed on Monday. Most of the market leaders have released their quarterly earnings at this point in the cycle. There are still earnings numbers that are due out over the next few weeks but not on any stocks that can move markets on their own.

In this week’s Weekly Options Recap video we take a look at our Overnight Pop trades that we closed out on Friday to end the week. These overnight trades continue to perform really well for us as we were able to close out of 3 more winners last week. We also take a look at a few of our favorite setups that have our attention for this coming trading week. Take a look at the video below and let us know if you have any questions that we can help with. We will be back on Wednesday for our next Midweek Options Update.

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