SPY Options Signal Bearish Contingency: How Traders Can Hedge or Capitalize on $680 Call Pressure

• SPY trades at $677.94, up 0.97% with volume surging to 51.9M—its highest level since late November.
• Put/call open interest ratio hits 1.74, with 216K puts at $505 and 95K calls at $700 (this Friday’s expiry).
• Block trades show $4.5M poured into SPY20251121C680 calls—hinting at strategic bullish positioning ahead of year-end.

Here’s the tension: SPY’s technicals and options data are pulling in two directions. The RSI at 39 and MACD below signal line scream for a rebound, but the put/call ratio and block trades scream caution. The key question is whether the $680 call wall will hold or collapse under bearish pressure.

"The $680 Call Wall and the Bearish Put Overhang"

Let’s unpack the options data. This Friday’s expiry sees 95K open interest at the $700 call—the highest strike with meaningful liquidity. That’s a psychological hurdle for SPY, which hasn’t closed above $680 since mid-December. Meanwhile, the put side is a minefield: 216K puts at $505 (a 20% buffer from current price) suggest deep-seated fear of a crash.

But here’s the twist: the block trade at SPY20251121C680 (6,000 contracts bought for $756,000) hints at institutional money betting on a late-year rally. If SPY breaks above its 30D support/resistance range (683.3–684.04), those calls could ignite a short-covering frenzy. The risk? If the 200D moving average ($621.51) reasserts itself, the $650 put wall (90K OI) could drag SPY into a death spiral.

"News Flow: Bearish Headlines vs. Bullish Earnings"

The past week’s news is a mixed bag. Analysts are warning of a "brutal 2026" for SPY, citing inflation and geopolitical risks. Yet the same week, Microsoft and Meta added $440B in market cap—driving SPY’s premarket gains. This duality mirrors the options market: fear of a crash vs. hope in tech-driven recovery.

The key takeaway? Investor sentiment is fragile. A weak jobs report or another tech slump could trigger the puts. But if AI optimism and trade deals hold, the $700 call wall becomes a battleground. Retail traders need to watch the SPY20251219C700 expiry closely—it’s a litmus test for year-end sentiment.

"Actionable Trades: Calls for the Bold, Puts for the Pragmatic"

For options traders:

• Bullish Play: Buy SPY20251226C680 calls (next Friday expiry) if SPY breaks above $683.30. Target $690, stop at $677.50.
• Bearish Hedge: Sell SPY20251226P650 puts (OI: 4,414) if SPY dips to the Bollinger Band lower bound ($657.86). Collect premium while capping downside risk.

For stock traders:

• Entry at $677.65 (middle Bollinger Band) with a target at $684.04 (30D resistance). Stop-loss at $674.90 (intraday low).
• Alternative: Short SPY if it closes below $671.40 (previous close)—aim for $662.10 (100D MA) as a first target.

"Volatility on the Horizon: Prepare for a Whipsaw"

The next 72 hours will be critical. SPY needs to hold above $677.65 to avoid testing the 200D MA. If it does, the $680 call wall becomes a catalyst for a short squeeze. But if the puts dominate, SPY could gap down on Monday. Either way, the options market is pricing in a 15–20% move by year-end.

Your move? If you’re bullish on the long-term S&P 500 story, buy those $680 calls. If you’re hedging a portfolio, the $650 puts offer cheap insurance. But tread carefully—this is a high-stakes poker game with the Fed’s next move as the wild card.