SPY Options Signal Bullish Bias: Key Strikes and Block Trades Point to Strategic Entry Zones

• SPY trades at $687.73, just 0.02% below its intraday high, with a 1.85 put/call OI ratio hinting at cautious bearishness.
• Block trades show heavy buying of SPY20260116P645 puts (sell put) and SPY20251121C680 calls, signaling mixed-term positioning.
• RSI at 54.6 and bullish Kline patterns suggest SPY could test $693.14 (Bollinger Upper Band) before year-end.

The market is hedging for volatility but remains bullish on SPY’s long-term trajectory.Bullish Sentiment in Options, But Caution Lingers at Key Strikes

Options data tells a story of divided priorities. This Friday’s expiring calls show heavy open interest at $690 (36,907 contracts) and $700 (33,286), while puts dominate at $684 (60,175) and $672 (59,476). The 1.85 put/call ratio isn’t screaming bearish—remember, SPY’s 200D moving average sits at 625.71, far below current price—but the concentration of puts near $672-$684 suggests traders are bracing for a pullback.

Block trades add nuance. The 6,000-lot buy of SPY20260116P645 puts (expiring Jan 16) implies institutional players are hedging against a sharp drop below $645. Yet the 5,000-lot call purchase at SPY20251121C680 (expiring Nov 21) shows long-term conviction. Think of it like a captain securing lifeboats while ordering the ship to sail faster—SPY’s direction is clear, but the crew’s wary of storms.

News Flow: Resilience vs. Concentration Risk

SPY’s 2025 performance—19% gains despite tariff shocks and crypto crashes—has burnished its reputation as a "set-it-and-forget-it" vehicle. But recent headlines about Big Tech’s 39% weight in the S&P 500 (via SPY) add a wrinkle. If NVIDIA or Apple stumble, SPY’s broad diversification could feel less protective. This explains the heavy put buying near $672-$684: investors are hedging against sector-specific volatility while still betting on the S&P 500’s long-term grind higher.

Actionable Trades: Calls for the Bold, Puts for the Pragmatic

For options traders, the next two Fridays offer clear entry points:

• Bullish Play: Buy SPY20260109C695 (next Friday’s $695 call). With SPY currently at $687.73, a break above $688.11 (30D support/resistance) could trigger a run to $693.14 (Bollinger Upper Band). This call gains value if SPY closes above $695 by Jan 9.
• Bearish Hedge: Buy SPY20260109P650 (next Friday’s $650 put). If SPY dips below $682.62 (200D support), this put caps downside risk while avoiding the crowded $672-$684 puts.

For stock traders: Consider entries near $682.62 (200D support) with a tight stop just below $680. If SPY holds here, target $693.14 as a profit zone. Alternatively, short-term traders could sell calls at $690 (SPY20260109C690) to collect premium if SPY consolidates.

Volatility on the Horizon: Balancing Bullish Momentum and Sector Risks

SPY’s technicals and options activity align for a bullish bias, but the Big Tech concentration risk can’t be ignored. The coming weeks will test whether the S&P 500’s momentum can outpace sector-specific headwinds. Traders should monitor SPY’s ability to hold above $682.62—break below that, and the 200D MA at 625.71 becomes a psychological anchor. For now, the data says: bet on the bull, but keep the umbrella handy.