SPY Options Signal Bullish Bias at $700 Strike Amid Heavy Put Open Interest – Here’s How to Play It

• SPY trades at $680.86, down 0.13% with volume surging to 42.1M shares
• Options market shows 1.77 put/call open interest ratio, with $700 calls and $650 puts dominating
• Block trades reveal $680 call buying ahead of Friday’s expiry, hinting at strategic positioning

The market is whispering two conflicting stories right now. On one hand, SPY’s 73 RSI and overbought territory scream caution. On the other, a mountain of put open interest at $650 suggests panic is brewing. But here’s the twist: heavy call buying at the $680 and $700 strikes tells a different tale. Let’s unpack what this means for your trading desk.The OTM Options Imbalance: A Battle Between Fear and Greed

Take a look at this Friday’s options chain. The $700 call has 101,123 open contracts—nearly triple the next strike. That’s not random. Big players are hedging or speculating on a push above the 30-day support/resistance cluster at $683–$684. Meanwhile, the put side is a landslide: $505 puts alone have 216,181 open contracts. Think of it like a stadium crowd—most are bracing for a crash, but a vocal minority is betting on a rally.

But don’t ignore the block trades. The 6,000-contract buy of SPY20251121C680 (expiring Nov 21) and the 5,000-contract SPY20250930C657 purchase show institutional money is locking in upside potential. These aren’t just noise—they’re maps to where smart money thinks SPY might go.

No Major News, But Options Tell a Story Anyway

There’s no recent headline risk for SPY—no earnings, no sector-specific drama. Yet the options market is alive with tension. This suggests the action is driven by macro forces: rate speculation, geopolitical jitters, or algorithmic momentum. Retail traders might be overthinking fundamentals, but the options data? It’s all about positioning for volatility, not current news.

Your Playbook: Calls for Conviction, Puts for Protection

For options traders:

• Bullish Play: Buy SPY20251219C700 (this Friday’s $700 call). With 101K open contracts, this strike is a magnet. If SPY closes above $685 by expiry, the call could gain 20%+.
• Bearish Hedge: Sell a put spread using SPY20251219P650 (93,207 OI) and SPY20251219P630 (81,949 OI). Collect premium if SPY stays above $640.

For stock traders:

• Entry Alert: Consider buying SPY near $683.30 (30-day support) with a stop below $679.26 (today’s low). Target $697.69 (Bollinger Upper Band) if the $700 call buyers succeed.

Volatility on the Horizon: What to Watch Next

SPY sits at a crossroads. The long-term 200-day MA at $620.13 is a distant floor, but near-term resistance at $685 could decide Friday’s fate. If the $700 calls expire worthless, bearish sentiment might reignite. But if SPY breaks above $685, the 100D MA at $660.87 becomes a stepping stone to retest $697.69. Keep an eye on next Friday’s options too—$685 calls have 5,580 open contracts, hinting at a potential short-covering rally.

This isn’t a binary bet. It’s a chess game between short-term bears and long-term bulls. Your move? Decide where the smart money’s block trades are pointing—and whether you’re ready to ride the next move, whatever it brings.