During the last trading week the futures of S&P500 tested 1300 and made an upward rebound, widening the lower border of the flat zone down to 1298.25. Thus, the main resistance levels are 1336.5 (the upward border of the flat zone), 1343 (the local high) and the option barriers located at 1350 and 1400. The main support levels are the 50-day EMA, the 1300 and 1250 option barriers, 1298.25, which is a lower border of the flat zone, and the local low at 1241.25. During the last week the actual volatility of S&P500 increased as compared with the previous week. However it was still rather low: the weekly movement range was 32pts, the daily volatility changed insignificantly 13.25- 15.25. The expected volatility remains to be below the average as well, which is confirmed by the low values of VIX (14.92 to 18.46).
This week’s economic calendar.
As we can see, there are few significant news releases scheduled for the week. The forthcoming trading week is going to be shorter because Friday, April 22nd, is a day-off. Consequently, at the moment a good option trading strategy is to apply flat-trading techniques, i.e. long butterflies and condors. However buying volatility right before the significant news releases is also possible. Volatility hikes are probable during the following news releases:
Building Permits - April 19th
Existing Home Sales – April 20th
Unemployment Claims – April 21st.
Besides, there is a season of quarterly reports going on in the US, which also may influence the market situation.
Provided by the Department of Options,
