SPY Options Signal Bullish Breakout Potential Amid Tariff Hopes—Here’s How to Play It

• SPY trades at $687.00, up 0.32% with volume surging to 26.8M shares.
• Open interest in OTM calls at $690 and $700 dwarfs puts at $670, hinting at aggressive bullish positioning.
• Trump’s China tariff speculation and a $1.99 dividend add near-term catalysts.

The options market is whispering a clear message: traders are leaning hard into a bullish SPY narrative. With calls at key strikes outpacing puts by a 1.75 ratio and block trades hinting at big-money moves, today’s setup feels like a pre-race favorite getting odds adjusted. Let’s break down why this could be a prime moment to act—and where the risks lie.

Bullish Calls Dominate, But Puts Signal Caution

SPY’s options chain is a tale of two extremes. This Friday’s $690 call (SPY20251226C690) leads with 29,176 open contracts, followed by the $800 call (SPY20251226C800) at 25,315. These strikes aren’t random—they align with SPY’s upper Bollinger Band at $691.19 and the 30D moving average of $677.08. The heavy call buying suggests traders expect a push above $690 before year-end.

But don’t ignore the puts. The $670 put (SPY20251226P670) has 25,823 open contracts, matching SPY’s lower Bollinger Band at $670.87. This creates a tight trading range: bulls target $690+, bears eye $670 as a critical floor. The block trade data adds intrigue—a $657 call (SPY20250930C657) saw 6,000 contracts bought in a single trade, hinting at institutional confidence in a mid-December rebound.

Tariff Talk and ETF Flows Fuel the Fire

The news cycle isn’t just noise—it’s fuel. Trump’s potential China tariff reduction could turbocharge trade-dependent sectors in the S&P 500, directly boosting SPY. Yet, the $20.1B in weekly outflows and VOO’s cost advantage (0.03% vs. SPY’s 0.09%) add friction. Here’s the twist: while outflows suggest caution, the dividend announcement ($1.99/share) and tariff optimism could attract rebalancing inflows.

Actionable Trades for Today’s Move

For options players, the SPY20251226C690 call is a high-conviction play. If SPY breaks above $687.22 (today’s high), this strike could see explosive gains by Friday’s close. For a longer-term angle, the SPY20260102C687 call (46,576 OI) offers leverage if the 200D MA at $623.07 continues to act as a floor.

Stock traders should consider entries near $683.30–$684.04 (30D support) with a target at $691.19 (upper band). A breakdown below $670.87 (lower band) would flip the script, making the SPY20251226P670 put a defensive play.

Volatility on the Horizon

SPY sits at a crossroads. The bullish technicals, options positioning, and tariff narrative all point to a potential breakout—but the 1.75 put/call ratio and ETF outflows remind us that bears aren’t out of the game. This week’s key is watching whether SPY can hold above $683.88 (intraday low) while volume stays elevated. If it does, the path to $690+ feels more than just a hope—it’s a plan.