SPY Options Signal $685 Bullish Bias: Whale Buys and RSI 50 Setup

• SPY trades at $684.82, up 0.62% with volume surging to 24.4M shares.
• Options data shows 24,878 open calls at $685 (this Friday’s expiry) vs. 19,786 puts at $659.
• Block traders bought 6,000 calls at SPY20250930C657 and 5,000 at SPY20251121C680, hinting at bullish positioning.
• Citi’s 7,700 S&P 500 target and AI-driven sectors could push SPY toward $700 by Q1 2026.

The market is whispering: SPY’s next move hinges on $685. Here’s why.Bullish Calls Dominate, But Puts Signal Caution

SPY’s options chain is a tug-of-war between bulls and bears. This Friday’s $685 call (OI: 5,931) and next Friday’s $687 call (OI: 46,461) are hotspots for retail and institutional bets. The put/call ratio of 1.76 (favoring puts) suggests lingering caution, but block trades tell a different story. A 6,000-lot buy at SPY20250930C657 and a 5,000-lot at SPY20251121C680 signal big players are hedging for a rally.

The RSI at 50.39 and MACD crossing below the signal line hint at a potential short-term pullback, but the 200D MA at $622.52 remains a floor. If SPY holds above $683.30 (30D support), the bulls could reclaim the $693.70 Bollinger Upper Band.News Fuels AI Optimism, But Debt Risks Lurk

Citi’s 7,700 target and AI sector momentum (e.g., Micron’s HBM gains) are tailwinds. Carvana’s S&P 500 inclusion and Alibaba’s outperformance also boost SPY’s diversification. Yet retail traders are bearish on $25.8T debt refinancing risks, and a 1% drop in SPY last week after Broadcom’s earnings shows volatility isn’t gone.

Trade Ideas: Calls for Breakouts, Puts for Protection

• Bullish Play: Buy SPY20251226C685 (this Friday) at $1.20–$1.30. If SPY closes above $685, the call could pop 50%+ as short-term bears cover.
• Longer-Term Bet: Buy SPY20260102C687 (next Friday) at $3.50–$3.70. A push to $690 (30D resistance) would validate the Citi 7,700 thesis.
• Bearish Hedge: Sell SPY20260102P670 (OI: 9,482) at $1.80–$2.00. If SPY dips below $679.74 (middle Bollinger Band), the put could cap losses.
• Stock Entry: Buy SPY near $683.30 (support level) with a stop below $682.68. Target $693.70 if the 30D MA at $676.62 holds.

Volatility on the Horizon

SPY sits at a crossroads. The RSI at 50 and MACD divergence suggest a consolidation phase, but the options data and AI-driven news flow lean bullish. If the $685 level holds, SPY could retest the $700 psychological barrier by January. However, a breakdown below $670 (next support) would trigger puts at $659–$665.

Final Take: The market is pricing in a $685–$690 range battle this week. Bulls have the edge with AI momentum and block trades, but bears aren’t out of the game. For traders, the $685 call and $687 call offer high-reward setups—if SPY’s 30D support holds. For the long haul, SPY’s 200D MA is still a buying opportunity, but patience is key.Bottom line: SPY isn’t just tracking the S&P 500—it’s a barometer for AI’s next move. And right now, the data says: $685 is the line in the sand.