SPY Options Signal Bullish Bias: Key Strikes and Whale Moves to Watch for January 2026

• SPY trades at $686.46, down 0.56% from its 52-week high of $690.31.
• Options open interest shows a 1.84 put/call ratio, with heavy bearish positioning at the $684 and $672 puts.
• Block trades reveal a $4.5M buy call at the $657 strike and a $1.1M sell put at $645, hinting at strategic bets.

Here’s the takeaway: SPY’s technicals and options data suggest a high-probability scenario where bulls could reclaim control if key support levels hold. Let’s break it down.

What the Options Chain Reveals About Sentiment and Strategy

The options market is a tug-of-war right now. While the put/call ratio (1.84) leans bearish, the distribution of open interest tells a more nuanced story. For this Friday’s expiration (Jan 2, 2026), the $684 put (OI: 59,533) and $672 put (OI: 59,279) dominate, suggesting traders are bracing for a drop below $680. But here’s the twist: the top OTM calls—like the $690 strike (OI: 35,601) and $740 strike (OI: 30,570)—show hidden bullish conviction.

Block trades add intrigue. A $4.5M buy call at SPY20260102C657 (expiring Jan 2) indicates institutional players are hedging a rally. Meanwhile, a $1.1M sell put at SPY20260116P645 (expiring Jan 16) could signal a bearish bet if SPY cracks $645—a level 6% below current price. The risk? If SPY holds above $680, the puts could expire worthless, leaving bears with losses.

No Major News, But Options Tell a Story

There’s no recent company-specific news for SPY, but that’s not a vacuum. The lack of headlines means the options activity reflects broader macro sentiment—likely tied to Fed policy expectations or sector rotation. Retail investors might be overestimating downside risk, while institutions are quietly accumulating calls. Think of it like a chess game: the market is preparing for a move even if the pieces haven’t shifted yet.

Actionable Trade Ideas for SPY

For options traders:

• Bullish Play: Buy the SPY20260102C690 call (strike: $690) if SPY breaks above today’s intraday high of $689.19. Target a close above $700 by Jan 2 for a 10%+ return.
• Bearish Hedge: Buy the SPY20260102P672 put (strike: $672) if SPY tests support near $681.30 (30D support level). This gives downside protection if volatility spikes.

For stock traders:

• Entry Near Support: Consider buying SPY if it rebounds above $681.30 (the 30D support level). A close above $689.19 would validate the bullish case, with a price target of $692.70 (Bollinger Band upper bound).
• Stop-Loss Strategy: Place a stop below $680.54 (lower support) to avoid a potential breakdown.

Volatility on the Horizon

SPY sits at a crossroads. The technicals are bullish, but the options market is pricing in a 1.84x higher bearish bias. My read? A short-term test of $680 support is likely, but a rebound could trigger a rally toward $715—a level backed by next Friday’s top call option (SPY20260109C715). The block trades suggest smart money is positioning for both outcomes. Your move? Stay nimble. If SPY holds above $683.29 (middle Bollinger Band), the bulls have a clear path. If not, brace for a deeper correction.

Bottom line: This is a setup where patience pays. Watch the $681–$686 range like a hawk. Breakouts or breakdowns here will define SPY’s next chapter.