SPY Options Signal $680–$700 Battle: Put Dominance and Whale Moves Point to Strategic Entry Zones

• Put/call ratio hits 1.9 as $672 and $681 puts dominate open interest
• Block trades show 6,000 calls bought at $657 and 750 puts sold at $645 ahead of Jan 16
• RSI at 44 suggests oversold conditions while 200D MA at $626.91 remains a key floor

Here’s the takeaway: SPY is caught in a tug-of-war between short-term bears and long-term bulls. The options market is pricing in a high probability of a pullback below $675, but technicals still favor a rebound above $690 if support holds. Let’s break down why this $680–$700 range could be the most volatile battleground in early 2026.

The Options Imbalance: A Bearish Crowd, But Bulls Are Ready

The put/call ratio of 1.9 tells us retail and institutional players are heavily hedging downside risk. This Friday’s top OTM puts ($672, $678, $681) have combined OI of 114,380 contracts—nearly double the top OTM calls ($690, $687) at 90,926. That’s not just fear—it’s a vote of no confidence in SPY’s ability to hold above $682.05 (30D support).

But here’s the twist: next Friday’s options show a shift. The $693 call (SPY20260109C693) has 46,930 OI, while the $660 put (SPY20260109P660) has 36,555. Bulls are quietly accumulating calls at higher strikes, betting on a breakout if the 200D MA ($626.91) continues to act as a floor.

Don’t ignore the block trades either. A 6,000-contract call buy at $657 (SPY20250930C657) and a 750-contract put sale at $645 (SPY20260116P645) suggest big players are positioning for a V-shaped recovery. The put sale at $645 is especially telling—it’s like a bet that SPY won’t fall below $645 before Jan 16, reinforcing the idea that the 200D MA is a critical level.

News-Driven Narrative: AI Momentum vs. Macro Uncertainty

The recent headlines paint a mixed picture. SPY’s 16.79% annual gain in 2025 and 0.43% rise on Jan 2 show resilience, but the 21.43% drawdown during the year still lingers in investors’ minds. The AI-driven trading systems mentioned in the analysis are bullish, but they’re only as good as the data they’re fed.

Here’s the catch: SPY’s 99% correlation to VOO and IVV means sector rotations (especially in tech and energy) will heavily influence its path. If AI and energy stocks keep outperforming, SPY could test $700 by mid-2026. But if the Fed tightens or inflation spikes, those puts at $672 and $678 might get exercised.

Actionable Trade Ideas: Calls for Breakouts, Puts for Protection

For options traders:

• Bullish Play: Buy SPY20260109C693 (next Friday’s $693 call) if SPY closes above $686.50 (intraday high). Target: $700 (5.5% gain if SPY hits it by Jan 9).
• Bearish Play: Sell a put spread with SPY20260109P672 and SPY20260109P681. Collect the premium if SPY stays above $675.

For stock traders:

• Entry: Consider buying SPY near $682.05 (30D support) if it holds above $674.28 (lower Bollinger Band).
• Target: $693.47 (upper Bollinger Band) if the 100D MA ($666.93) continues to rise.
• Stop-Loss: Below $674.28 triggers a reevaluation of the bullish case.

Volatility on the Horizon: Balancing Bullish Momentum and Bearish Caution

The key takeaway? SPY is at a crossroads. The long-term bullish trend (200D MA at $626.91) and AI-driven momentum suggest a push toward $700 is possible, but the heavy put activity at $672–$681 means a sharp pullback can’t be ruled out.

Your best bet? Use the options market as a guide. If SPY closes above $686.50 today, the bulls gain momentum. Below $675, the puts become a bigger threat. Either way, the $680–$700 range is where the action will unfold—and where your next trade should be positioned.