Large Bullish Block Trade Bets on S&P Hitting 8,000 by Year-End
Whether the Fed hikes tonight or not, it can't change oil-driven inflation, nor can it change Treasury yields. If oil prices keep rising, the market will certainly price in a second rate hike, making a spontaneous market pullback unavoidable. After all, Warsh himself said his judgment is dynamic.
And based on historical experience, the market has a high probability of continuing to pull back in late September.
But Wednesday was something — a large block trade opened a Bull Call Spread: Buy the year-end-expiry 800 Call, Sell the 830 Call: buy$SPY 20261218 800.0 CALL$ ,sell $SPY 20261218 830.0 CALL$
SPY rarely sees large bullish block trades, so this spread being placed right before the rate decision is quite telling.
Today, news broke of a collaboration between Hynix and Intel, and INTC rose another 4.45%, back above 100.
I suspect last week's short-squeeze rally and the large bullish block trades were betting on this Hynix collaboration. With a partnership this significant between two major companies, many people would know about it, so an early move makes sense. The original target of this positive catalyst was to break through 110, but Anthropic had to jump out and grab attention, knocking the uptrend back down. Intel's market maker, being the sly type, cooperated with another round of shakeout. That's roughly how it played out.
After all this back-and-forth, whether it can reach 110 is hard to say, but selling puts definitely won't lose money.
Theoretically, the stock should close between 95 and 100 this week, but data analysis isn't omniscient. In terms of priority, fundamental analysis comes first, options analysis comes second. A single fundamental news item can overturn an entire options data framework — that happens quite often.
$United States Oil Fund LP(USO)$
Rumor has it that a billionaire investor with A9-level assets recently got liquidated shorting crude oil. Combined with today's sudden oil plunge, last week's spike does look a lot like a short squeeze.
In other words, at the 95 level, there were indeed many people shorting, and after getting squeezed out, there were no bulls stepping in to take the other side, so the price naturally fell back.
USO's pullback initially targets 150. If the price doesn't break below 150 and consolidates there rather than pulling back further, then oil prices will probably rally again.
$Energy Select Sector SPDR Fund(XLE)$
XLE's options activity is much more active — after all, for crude oil exposure, trading futures is more convenient.
Put openings show large block trades continuing to short the 62.5 strike as usual $XLE 20261218 62.5 PUT$. Judging by the expiration dates, near-term bearish bets are relatively few, so now is not yet the time for a broad oil pullback. Same as yesterday's assessment — wait until October to reassess.
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