SPY Options Signal Deep Bearish Sentiment, But Whale Buys at $690 Call Suggest Tactical Bull Play

• Put/call open interest ratio hits 1.82 as traders bet on downside to $505
• Block buyers snap up 6,000 SPY20250930C657 calls ahead of September expiry
• RSI at 55.35 hints near-term bounce possible from 655.94 support level

Here's what you need to know: SPY's options market is screaming bearish with record put open interest at $505, yet institutional buyers are quietly loading up on $690 calls. This creates a fascinating tension between short-term fear and long-term conviction that could set up a volatile December for the S&P 500 proxy.

Bearish Overhang vs. Institutional Bullishness

The options chain tells two conflicting stories. On one hand, put open interest is concentrated at absurdly low strikes - $505 puts have 216,149 contracts outstanding, suggesting some investors expect a 20%+ drop by December. The Bollinger Bands show SPY is trading near its 200-day low of $655.94, reinforcing the bearish technical backdrop.

But don't ignore the whale activity. The SPY20250930C657 call block trade (6,000 contracts at $762.50 strike) indicates big money is positioning for a summer rally. Even more telling: $690 calls have 69,965 open contracts expiring this Friday, showing retail and institutional players are hedging against a potential rebound. The MACD histogram turning positive (-0.197) suggests the bearish momentum may be losing steam.

News Flow: Bullish Fundamentals vs. Geopolitical Jitters

Vanguard's bullish S&P 500 outlook and 11 analyst picks for 2026 are pushing long-term optimism. But Trump's H-1B visa fee proposal and mixed November jobs data create near-term uncertainty. The key takeaway? SPY's role as a market barometer means it'll likely oscillate between these forces until the Fed's policy direction becomes clearer.

Actionable Trade Ideas

For options traders:

• Bull Play: Buy SPY20251219C690 calls (OI: 69,965) with a stop below $673.30 support. Target $700 if SPY breaks above 30-day resistance at $684.04.
• Bear Play: Sell SPY20251219P650 puts (OI: 87,991) as a covered write if you're already long SPY. Collect premium while hedging downside to $655.94.

For stock traders:

• Entry Alert: Consider buying SPY at $673.30 (support level) with a tight stop at $670.07. First target is 30-day MA at $676.44, then 200-day MA at $681.46.
• Alternative: Short SPY at $684.04 resistance with a stop above $685.31. Target $675.00 if the 100-day MA at $661.76 holds.

Volatility on the Horizon

The coming weeks will test SPY's resolve. With puts dominating the options market but block buyers accumulating calls, we're likely in for a volatile dance between $655.94 and $685.31. The key is to respect the near-term bearish bias while staying positioned for a potential springboard off the 200-day MA. December options expiration on the 19th could create artificial support/resistance levels that traders should watch closely.