SPY Options Signal Bullish Momentum: Calls at $690 Dominate as Puts at $670 Hedge Risk – Here’s How to Play It

• SPY trades at $687.67, up 0.41% on heavy volume (37M shares), with Bollinger Bands suggesting a potential breakout above $691.19.
• Options data shows a 1.75x put/call open interest imbalance, but heavy call OI at $690 and $700 hints at a short-term bullish bias.
• Block trades like SPY20250930C657 (6,000 contracts bought) and SPY20260116P645 (750 puts sold) signal institutional positioning for a late-year rally.

The market is whispering: SPY could test $700 this week. With SPY trading near its 30D moving average and options data skewed toward calls, the setup screams for a breakout play—but the put-heavy open interest warns of lingering caution. Let’s break it down.Bullish Calls at $690 vs. Defensive Puts at $670: What’s the Play?

The options chain is a chessboard. Right now, SPY20251226C690 (29,176 OI) and SPY20260102C690 (33,984 OI) dominate the call side, suggesting a consensus that SPY could punch through $690 this week. That’s not just noise—it’s a vote of confidence from options traders. Meanwhile, SPY20251226P670 (25,823 OI) and SPY20260102P670 (9,867 OI) show a defensive stance, with investors hedging against a pullback to the 200D support zone ($681.46–$685.32).

But here’s the twist: the block trade SPY20250930C657 (6,000 calls bought for $4.5M) and SPY20260116P645 (750 puts sold) hint at a longer-term bet. Someone’s stacking the deck for a post-holiday rally, while others are bracing for a dip. The key is to balance aggression with caution.

News Flow: GDP Beats vs. Durable Goods Woes – Does It Matter?

Last week’s GDP print (4.3% Q3 growth) was a jolt of optimism, but the 2.2% drop in durable goods orders and weak Philly Fed index (-16.8) muddy the waters. SPY’s components—like ZIM’s 8% premarket surge over takeover talks and Novo Nordisk’s 8% jump on FDA approval—show sector-specific energy. However, the broader market’s muted reaction (SPY down 0.02% premarket) suggests investors are parsing these signals carefully.

The takeaway? Sector rotation is king. Energy (IYE up 0.02%) and industrials (XLI up 0.3%) are outperforming, but tech (XLK down 0.1%) and semiconductors (XSD down 1.2%) are dragging. This mixed bag means SPY’s path higher depends on whether the Fed’s December meeting (Consumer Confidence report due Friday) validates the GDP optimism.

Actionable Trade Ideas: Calls, Puts, and a Precision Entry

For options traders, the most compelling plays are:

• SPY20251226C690 (this Friday): A 0.4% move to $690 would make this call a 10%+ winner. If SPY breaks $690, roll into SPY20260102C690 for extended exposure.
• SPY20260102P670 (next Friday): A 1.75x put/call imbalance means a $670 put could act as a safety net if the rally falters.

For stock traders, the setup is tighter:

• Entry near $683.30 (30D support) with a stop just below $683.88 (intraday low). Target $691.19 (upper Bollinger Band) if SPY holds above $684.83 (previous close).

Volatility on the Horizon: Positioning for SPY’s Next Move

The market is in a tug-of-war. On one side, the 30D bullish trend and heavy call OI at $690 scream for a breakout. On the other, the 1.75x put/call imbalance and weak Philly Fed data warn of a potential pullback. The block trades suggest smart money is hedging both outcomes.

Here’s the play: Go long SPY20251226C690 for a short-term rally, and SPY20260102P670 as a hedge. For stock, enter near $683.30 with a tight stop. If SPY closes above $690 this week, the 200D moving average ($681.46) becomes a psychological floor. But if it stumbles below $681, the puts at $670 could save the day. Either way, the options market is giving us a roadmap—now it’s time to follow it.