SPY Options Signal Bearish Contingency: How Traders Can Navigate the 680 Pivot Amid Whale Moves

• SPY trades at $680.87, up 0.95% with volume surging to 58.7M—its highest since late 2024.
• Put/call open interest ratio hits 1.97, with $505 puts (OI: 216K) dominating the fear meter.
• Block traders just bought 6,000 SPY20250930C657 calls—$4.5M bet on September’s volatility.
• Warren Buffett’s ETF exit and Paul Tudor Jones’ 0.72% SPY trim add narrative fuel.

Here’s the takeaway: SPY’s technicals and options data are locked in a tug-of-war. The price is clawing toward a short-term bearish trend while long-term moving averages (30D: 676.27, 200D: 621.98) scream bullish. But the options market isn’t buying it—put open interest is nearly double calls, and block traders are hedging for a wild September. Let’s break it down.

The Options Imbalance: A Bear Market Playbook in the Making

The OTM put/call ratio tells a story of caution. For this Friday’s expiry, $505 puts (OI: 216K) dwarf even the next-largest put at $555 (117K). That’s not just fear—it’s a contingency plan for a 25% drop from current levels. Meanwhile, call buyers are clustering at $690 (OI: 61K) and $700 (94K), strikes that align with the 30D support/resistance range (683.31–684.04).

But here’s the twist: block traders are buying SPY20250930C657 calls in bulk. Why September? That’s 3 months out, well beyond the next expiry cycle. It suggests some big players are hedging against a potential earnings-driven rally or macro event. The risk? If SPY fails to break above 684.04 today, those calls could turn into a drag on sentiment.

News Flow: Buffett’s Exit Adds Fuel to the Fire

Warren Buffett’s reported divestment from a long-endorsed ETF (widely assumed to include SPY) is a psychological headwind. Even a 0.72% stake reduction by Paul Tudor Jones—while smaller—adds to the narrative of "smart money" tightening belts. Retail traders often overreact to such moves, amplifying short-term volatility.

Yet the market isn’t pricing in catastrophe. The RSI at 41.38 hints at oversold conditions, and Bollinger Bands show SPY is trading near the middle band—no extreme deviation. This suggests the selloff, if it comes, might be sharp but shallow.

Actionable Trades: Calls for the Brave, Puts for the Prudent

For the bullish:

• SPY20251226C690 (next Friday expiry): Buy if SPY closes above 683.31 today. The 690 strike is a dense call OI zone and aligns with 30D resistance. Target: 695–700.
• Stock entry: Buy SPY near $678.34 (middle Bollinger band) with a stop at 676.47. Target: 685.

For the bearish:

• SPY20251226P680 (next Friday expiry): Buy if SPY dips below 678.34. The 680 strike is a key psychological level and sits just above the 200D MA.

Volatility on the Horizon: Balancing the Bull and Bear

SPY isn’t breaking new ground—it’s dancing on a tightrope. The long-term bulls are still in the game (200D MA is 621.98!), but the options market is pricing in a worst-case scenario. My read? Use today’s 0.95% rally as a test. If SPY holds 678.34, the 690 calls could be a low-risk bet. But if the 676.47 intraday low gets pierced, those 680 puts will look like insurance worth buying. Either way, September looms large—watch those block traders’ September calls like a hawk.