SPY Options Signal Bearish Sentiment Amid Rebalancing: Key Strikes to Watch for December 2025

• SPY trades at $684.11, down 0.23% from its 52-week high of $694.29
• Put/call open interest ratio hits 2.07, with $670 and $680 puts dominating the options chain
• Block trades show $4.5M call purchase at SPY20251121C680 and $2.4M put buy at SPY20250916P680

Here’s the thing: SPY’s options market is whispering caution while technicals still point higher. The put/call imbalance and block trades suggest smart money is hedging against a pullback, but the ETF remains above all major moving averages. Let’s break down what this means for your December strategy.

Bearish Options Flow and Whale Moves

The options chain tells a story of fear. For Friday’s expirations, $670 puts (OI: 29,573) and $680 puts (OI: 22,609) dominate, while next Friday’s $650 puts (OI: 109,038) show even deeper bearish positioning. Meanwhile, call open interest peaks at $700 (15,285) and $790 (10,352), but those strikes are 2.5% and 12% above current price.

Block trades add intrigue. A $4.5M buy of SPY20251121C680 calls (strike price $680) suggests some bullish conviction, but the $2.4M purchase of SPY20250916P680 puts (strike $680) tells a different tale. These moves hint at a tug-of-war: bulls are buying time, while bears are locking in downside protection.

News That Could Flip the Script

Berkshire’s SPY exit is the big elephant in the room. Selling 100% of a long-term holding isn’t typical Buffett behavior—this feels like a valuation call. But Carvana’s S&P 500 inclusion adds $0.5B in inflows to SPY’s AUM, which could stabilize the ETF’s price action. Analysts like Oppenheimer and Deutsche Bank are still bullish on 2026, but technical indicators show SPY’s 14-day RSI at 60.77—neutral territory, not screaming buy.

Actionable Trades for December

For options players:

• Sell the $670 puts (SPY20251212P670): With 29,573 contracts in open interest, these could attract volatility if SPY holds above $683.20 (30D support).
• Buy the $700 calls (SPY20251212C700): If SPY breaks above $686.64 (intraday high), these 2.5% OTM strikes could catch a short-term rally.

For stock traders:

• Buy SPY near $683.20 if it holds above the 30D support level. Target $690 (Bollinger Upper Band) if the 200D MA at $617.86 keeps providing a floor.
• Short SPY at $672.12 if it breaks below the 200D support. Stop loss at $674.26 (middle Bollinger Band) to protect against a rebound.

Volatility on the Horizon

SPY’s December is shaping up as a tightrope walk. The S&P 500 rebalancing and Fed rate cut expectations could fuel a rally, but the options market isn’t pricing in much upside. My read? Stay nimble. If SPY holds above $683, the 200D MA becomes a psychological floor. But if it cracks $672, the puts at $650 could ignite a wave of panic selling. Either way, December’s options expirations (Dec 12 and 19) will be your best friends for timing entries.

Bottom line: This isn’t a clear bullish or bearish setup—it’s a chess match. The puts are the king’s gambit; the calls are the knight’s charge. Where you stand depends on whether you see SPY as a fortress or a house of cards.