SPY Options Signal Bullish Breakout Potential Amid Heavy Put Protection at $680 – Here’s How to Position for Friday’s Expiry

• SPY trades at $695.81, up 0.25% with volume surging past 43.9M shares—its highest intraday high since mid-December.
• Put/call open interest ratio hits 2.33, with 125K puts at $680 (this Friday’s most traded strike) signaling major support below current price.
• Block trades reveal whales selling 500 puts at $750 and $755 expiring Feb 20, hinting at long-term bullish positioning.

Here’s the takeaway: SPY is perched at a technical sweet spot. Its RSI (72.5) and MACD (3.3) scream short-term momentum, while the options market is bracing for a potential pullback. The question isn’t if SPY will move—it’s which way the crowd is hedging.

Bullish Momentum vs Bearish Safeguards: Decoding the Options Crowd’s Playbook

Let’s start with the elephant in the room: 125K puts at $680 (this Friday’s top put strike) act like a giant airbag below SPY’s current price. That’s not just noise—it’s institutional money betting on a bounce off this level. Contrast that with call open interest: 45K contracts at $700 and 50K at $840 (the top two call strikes). Think of it like a seesaw. The puts are the heavy weight on the bearish side, but the calls at $700+ show retail and institutional players are eyeing a breakout.

Now, the block trades add intrigue. Selling 500 puts at $750 (SPY20260220P755) and $750 (SPY20260220P750) for February expiry? That’s like locking in a floor 5% below current price while betting SPY will recover by then. Meanwhile, the 1,000 puts sold at $650 expiring June 18 suggest long-term confidence—these players aren’t just hedging, they’re positioning for a multi-month rally.

No Major News, But the Market Is Talking

The lack of recent headlines means fundamentals aren’t driving this move. Instead, the options data tells a story of macro positioning. With the 200D MA at $630 still a distant support level, and the 30D MA ($684.6) acting as a near-term floor, SPY’s price is caught between short-term optimism and long-term caution. Retail traders might be amplifying this by buying calls at $700 (SPY20260116C700) ahead of Friday’s expiry, while institutions are quietly buying time with June-dated puts.

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

For the bullish: Buy SPY20260116C700 (next Friday’s $700 call) if SPY breaks above $696.75 (Bollinger Upper Band). Why? The $700 strike is the most liquid call ahead of Friday, and a close above the upper band would validate the short-term bullish trend. Target: $710 by Jan 23 if the S&P 500’s broader momentum holds.

For the cautious: Buy SPY20260116P680 (this Friday’s $680 put) if SPY dips to $685.26 (middle Bollinger Band). This strike aligns with the 200D MA cluster (682.2–686.2), where historical support is strongest. Exit if SPY holds above $685—let the puts expire worthless, or hold for a potential rebound.

Stock traders: Consider entries near $684 (30D MA) if SPY tests support. A close above $690.68 (today’s open) would confirm strength, with price targets at $705 (RSI equilibrium) and $715 (MACD extension).

Volatility on the Horizon: Balancing the Bull and Bear Bets

SPY isn’t just a proxy for the S&P 500—it’s a barometer for market sentiment. Right now, the data shows a crowd hedging downside risk while keeping the door open for a rally. The key is timing: this Friday’s $680 puts could create a floor, but next Friday’s $700 calls will test if bulls can capitalize on it. If SPY holds its 30D MA and RSI retracts to 65–70, the trend remains intact. But if those puts get assigned (SPY < $680 by Jan 16), brace for a short-term selloff.

Bottom line: This is a setup for those who want to play both sides. The options market is pricing in a volatile week—use that to your advantage.