SPY Options Signal $680 Put Dominance: A Bearish Setup Amid Bullish Fundamentals – Here’s How to Position

• SPY trades at $687.66, down 0.88% from $693.77, with Bollinger Bands suggesting a potential rebound near $686.15.
• Put/call open interest ratio of 2.33 highlights bearish sentiment, led by $680 puts (OI: 142,850) and $690 puts (block trade buy: 50,790 contracts).
• Block trades on $680 and $690 puts signal institutional caution, while tech-heavy ETF fundamentals remain bullish.
• RSI at 63.45 and MACD above signal line hint at short-term consolidation ahead of a potential breakout.

Put Open Interest at $680 Signals Caution, While Block Trades Add Complexity

The options market is screaming caution. SPY’s put/call open interest ratio (2.33) is a red flag—traders are buying puts at a 2.3x rate compared to calls. The most telling strike? $680 puts, with 142,850 contracts outstanding. That’s not just noise; it’s a price level where institutional players are hedging or shorting.

But here’s the twist: block trades on $680 and $690 puts (like the 50,790-contract buy of SPY20260123P680) suggest big money is positioning for a sharp drop. These aren’t retail traders—they’re whales. The $680 strike is also just 1.1% below SPY’s current price, making it a prime target if the ETF breaks below its 30-day support at $687.56.

Don’t ignore the calls, though. $695 calls (OI: 32,165) and $700 calls (OI: 41,838) show some lingering bullishness. But with the put/call imbalance so skewed, the odds are tilted toward a downside move.

Bullish ETF Fundamentals Clash with Bearish Options Sentiment

SPY’s fundamentals are still a rockstar. The ETF holds $716B in assets, a 0.09% fee, and a 1.05% dividend yield. Its top holdings—Nvidia, Apple, Microsoft—are powering earnings growth. Recent news even calls SPY a "low-cost, diversified exposure to the S&P 500" with a Zacks ETF Rank of 2 (Buy).

But here’s the rub: the market is pricing in risk. The $680 put block trades and the ETF’s 28.45 P/E ratio (mentioned in recent reports) suggest investors are hedging against a potential correction. The Fed’s looming rate decisions and sticky inflation data (noted in late 2025 news) add fuel to the fire.

This isn’t a war between fundamentals and options—it’s a tug-of-war. SPY’s tech-driven momentum could push it higher, but the options data says "wait for a pullback."

Strategic Entry Points: Targeting $680 Puts and 690 Puts for Downside Protection

If you’re bullish but cautious, here’s how to play it:

• Bearish Play: Buy SPY20260123P680 puts (strike: $680, expiring Jan 23). With a block trade buy of 50,790 contracts, this strike has liquidity and institutional backing. Target entry if SPY dips below $687.56 support. Stop-loss above $690.
• Neutral Hedge: Buy SPY20260123P690 puts (strike: $690, OI: 16,930). These offer downside protection if SPY breaks below $686.15 (Bollinger Band middle).
• Bullish Play (if rebound happens): Buy SPY20260123C695 calls (strike: $695, OI: 12,496). These could benefit if SPY rebounds above $691.71 (intraday high) and tests $698.76 (Bollinger upper band).

For stock traders: Consider entering long positions near $686.15 (Bollinger middle band) if SPY holds above $683.24 (200D support). Exit targets: $691.71 (intraday high) or $698.76 (Bollinger upper).

Volatility on the Horizon: Balancing Bullish ETF Momentum with Bearish Options Pressure

The next 10 days will be critical. SPY’s 30-day moving average ($685.47) and 200D MA ($631.82) form a wide support corridor. If the ETF holds above $683.24, the bulls could reclaim ground. But if the $680 puts get exercised, we might see a test of $673.55 (Bollinger lower band).

The key takeaway? Don’t fight the options crowd. The put/call ratio and block trades are clear: volatility is coming. Position yourself to profit from a potential dip, but keep an eye on the tech sector’s earnings momentum. After all, SPY’s fundamentals are still strong—this isn’t a bear market, just a breather.