Weekly OFR (Option Flow Report)

The OFR — Option Flow Report

By Chris Capre, Head of BOS / TW / 2ST

(Do not forward)

Welcome to a new trading week!

The Week in Review

SPY:

SPY had a marginally bullish close last week, mostly on the back of the SA (Situational Awareness) hedge fund blowing up (margin called) and selling its entire position to Citadel, which bought the AI tickers in droves on Thursday. This created a 22 pt bounce from low to high last week, all in the last two sessions. This is all after the post FOMC selling with 30 yr yields hitting their highest levels since 2007 (GFC – Great Financial Crisis).

QQQ:

QQQ’s (as predicted) continues to have much more volatility than SPY and we expect this to remain for at least this week. Also unlike SPY, QQQ’s closed marginally bearish despite a 29pt rally from Weds aftermarket to Fri open, yet still closed slightly in the red. With more AI/tech earnings on deck, expect a volatile week for QQQ’s.

• We begin this week with some confusing headlines on the geopolitical front with Trump claiming talks with Iran are starting today, and holding off on some ‘massive attack’, yet Iran reporting “No current US talks”. We’re not sure which side is telling the truth, but SPY gapped up 6pts to 750 along with USO gapping 13pts own to 12, its lowest price since Jul 28. If ‘talks’ resume, oil heads lower, likely along with bond yields, which were getting ‘yippy’.

• Despite the geopolitical machinations going on, we have an action packed earnings week with PLTR, AMD, SPCX (1^st ever public earnings), SNDK, APP and more AI/software/memory/tech on deck. This should create a volatile week in earnings with NFP to cap off the week on Friday, so a macro event filled calendar.

• Of all the earnings this week, we think AMD and SPCX (both Tues after the close) will have the most impact with AMD being a pillar for the AI/supply side trade and then SPCX reporting its 1^st earnings with millions of shares unlocking this week. Both are setup for big potential moves (in either direction with high implied moves).

• One critical question this week is what happens to tech and the AI trade. The Mag7 are holding some upside with MSFT and AMZN looking strong post earnings while AAPL and META a bit weak. As we said last week, post Citadel buying, the easy money has been made, so will the AI trade reinflate, or continue to sell off? The KOSPI lost over -5.9% while most AI tickers are down on the day in pre-market action.

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