SPY Options Signal Bullish Breakout Potential Amid Heavy Call Buying – Here’s How to Position for 2026

• SPY trades at $690.45, up 0.36% with volume surging to 20.9M.
• Put/Call Open Interest ratio hits 1.83, but $700 calls dominate this Friday’s options chain.
• Block trades show 6,000 SPY20250930C657 calls bought—hinting at long-term bullish positioning.

Here’s the takeaway: SPY’s options market is whispering "upside breakout ahead," even as bears hedge with heavy put buying. Technicals align with a short-term bullish trend, but the real story lies in the options data—let’s break it down.

Bullish Calls Dominate, But Puts Tell a Cautionary Tale

The options chain for this Friday (Dec 26) shows $700 calls leading with 18,295 open contracts, while $670 puts top the put side with 25,509 OI. That’s a classic "buy the rumor, sell the news" setup—traders are pricing in a rally to $700+ but hedging against a pullback to $670. The 1.83 put/call OI ratio suggests bears aren’t backing down, yet the heavy call buying at strikes $695–$700 implies conviction in a near-term push above the $690.79 Bollinger Band upper level. Don’t ignore the block trades either: A 6,000-contract SPY20250930C657 call buy (turnover: $4.5M) signals big players are locking in long-term upside potential.

No Major News, But Options Tell the Story

There’s no recent headline noise about the S&P 500 ETF itself, but the options market is loud. The lack of news means fundamentals aren’t driving this—volatility expectations are. With the RSI at 54.53 and MACD hovering near its signal line, SPY is in a "coiling for a move" phase. The heavy call buying suggests traders expect earnings season or macro data (like inflation prints) to catalyze a breakout. But here’s the catch: If the S&P 500 underperforms in early 2026, those $670–$680 puts could trigger a rapid selloff. Keep an eye on the 200D MA at $681.46—a break below that would validate bearish sentiment.

Actionable Trades: Calls for the Breakout, Puts for the Safety Net

For options traders:

• Bullish Play: Buy SPY20251226C700 (this Friday’s $700 call). If SPY closes above $690.79, this strike could see explosive gamma.
• Bearish Hedge: Buy SPY20251226P670 to protect against a drop to the $673–$682 Bollinger Band range.
• Long-Term Bet: The SPY20260102C698 call (next Friday) offers leverage if the ETF surges past $700.

For stock traders:

• Entry: Consider buying SPY near $683.31 (30D support) if it holds above the $681.46 200D MA.
• Target: Aim for $700 if SPY breaks the $690.48 intraday high.
• Stop-Loss: Exit below $677 to avoid a potential breakdown.

Volatility on the Horizon: Positioning for a Bullish 2026

SPY’s technicals and options data are painting a clear picture: A breakout above $700 is the next big move, but volatility remains a wildcard. The key is balancing aggression with caution—use the heavy call buying as a signal, but don’t ignore the puts. If you’re bullish, the SPY20251226C700 and SPY20260102C698 calls offer high-reward setups. If you’re bearish, the $670–$680 put strikes provide downside protection. Either way, December 2025 is shaping up to be a pivotal month for the S&P 500—and the options market is already pricing it in.