Futures are way up this morning. The SPY is currently sitting at 328.25 in the premarket. In pre-market since yesterday it has done nothing but rise. In the premarket charts at the moment we see that the 10 moving average line is slightly above the 20 moving average line on 5,10 and 15 minute charts. Additionally, and important to notice, the buying volume is much higher than yesterday.
The SPY seems to be headed for a big gap up here of potentially 4 points. It will be hard to fight against this moment this morning, so I am going with Calls. However, in the past, when we have experienced big gap ups like this, sometimes people take profits at open so the SPY could fall in the beginning. On the other side, I think shorts are getting squeezed out here and we could see the SPY back at 330 soon. If it drops, I would wait for a reversal off support line or if it just moves sides ways I’ll look for buying volume to confirm my decision. In order for this trading plan to be in play SPY must remain trading above that key support level near 326.19. If I see this it would trigger a buy to open followed by sell to close CALL option move today. Finally, know that because of recent volatility, these options will be more expensive than usual. Resistance: 328.28, 328.62, 328.97
Support: 328, 327.75, 327.54
Today’s Trade of The Day is SPY February 7 329 CALLS