Will S&P 500 Weather Biden's Debt-Ceiling Meeting, CPI Data? Options Market Weighs In

The week so far witnessed nervous moves as market participants maintained caution in the wake of the Federal Reserve's policy decision while concerns over the health of the banking sector also came to the fore. Investors and traders are anticipated to carry forward their caution into next week as President Joe Biden is scheduled to meet top Congressional leaders regarding the debt ceiling issue. The release of consumer price inflation data will also be keenly watched by market participants.

Also Read: How To Invest In The S&P 500

The S&P 500 closed 0.7% lower on Wednesday. In order to get a better picture of the index's potential support and resistance, here's a look at crucial trading ranges priced in by the options market for next week:

1. Resistance: The index closed at 4,090.75 on Wednesday. Options expiring on May 12 indicate open interest accumulation is gathering momentum at the 4,150 Call strike, indicating the level is being considered as a preliminary resistance for the short term. Other higher strikes too are witnessing increasing open interest numbers; however, the 4,150 level may act as the first line of resistance.

2. Support: On the downside, open interest accumulation is gathering pace at the 4,050 mark, indicating the level is likely being considered as the first line of support. If the level fails to hold in the wake of extremely negative news, the second support comes in at the 4,000 level.

It is noteworthy that more clarity will emerge as open interest numbers increase and a wider market view is available towards the beginning of next week. However, it is also true that open interest numbers only provide a fair idea about support and resistance levels. A piece of major news or a macro event can lead to significant movement in asset prices that, in turn, could lead to changes in open interest levels.

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